What is stock trading & how does it work?

What is stock trading & how does it work?

Of course, you have heard about stock trading but, if you are not familiar with its primary actions, I'm here to help you.

Usually, people go to someone who has the answer, and if you’re lucky, that someone might be you. Yes, you read that right, so let's begin!

What is Stock Trading? 

Stock trading simply involves buying and selling stocks. That's like any other marketplace but only listed company's stocks are allowed to trade here.

A brief overview of the stock market

In the stock market, securities such as stocks, bonds, and shares of public listed companies are bought and sold. Investing in stocks means buying tiny shares of proprietorship in a public company. Those small units of shares are known as the company's stock. 

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Here’s how it works, traders usually buy stocks when the stock rate is comparatively less and wait till the stocks rate gets higher. Once the rate reaches the expected level you hit the jackpot and it's time to sell the stock. 

There is a massive profit margin in the stock trading sector.  

But sometimes things don't work as per plan, if the stock rate decreases the buyer has to bear the loss

The target of stock traders is to make capital out of short-term market events. 

 

There are some traders and brokers who buy and sell on the same day or multiple times throughout the working day, that's insanely interesting and stressful. 

OK, I know what you’re thinking, how will you know which companies' stocks are profitable or risky? 

 

In this case, you can go through the company profile and record available on the companies website and google. But the most reliable source is a broker. 

Here’s how it works: the broker can be an independent person or firm that works as a middle man between an investor and market exchange.

And in exchange for service, they charge a commission from the customers.

How does the stock market work?

For you, here I have mentioned the steps about how the stock market works:

1. Initial public offering (IPO) lists companies in the primary market.

2. The part of the shares typically gets distributed in the Secondary Market.

3. The issued stocks can be traded by the investors, in the secondary market. 

4. The stockbrokers and brokerage firms are registered with the stock exchange which offers you to purchase a particular stake at the mentioned price.

5. Then the broker passes on your buying order to the exchange, which searches for a selling order for the same share.

6. The procedure takes T+2 days i.e.within two working days you will get your shares transferred to your Demat account. 

The stock market is one of the largest sectors for investment. But wait – there’s more, stock market investments are often compared with gambling. As it's uncertain and anything can happen in a matter of time. 


Some popular stocks

Here, I have categorised popular stocks in three sections:
 

Section 1- The Best Value Stocks
 

  • UWM Holdings Corp. (UWMC)

  • United States Steel Corp. (X)

  • Qurate Retail Inc. (QR TEA)

  • Sage Therapeutics Inc. (SAGE)

  • Bio-Rad Laboratories Inc. (BIO)


Section 2 - The Fastest Growing Stocks
 

  • LyondellBasell Industries NV (LYB) 

  • Nucor Corp. (NUE)

  • Steel Dynamics Inc. (STLD)

  • Nielsen Holdings PLC (NLSN)

  • Westlake Chemical Corp. (WLK)
     

Section 3 -The Stocks with the Most Momentum
 

  • GameStop Corp. (GME)

  • Upstart Holdings Inc. (UPST)

  • Devon Energy Corp. (DVN)

  • Continental Resources Inc. (CLR)

  • Alcoa Corp. (AA)

  • Russell 1000

Is stock good for beginners?

Yes, of course, as long as they are comfortable investing their money, and expecting a good investment return, they are good to go. I know the feeling of getting into something new is a little bit difficult. But with time, you will start to understand the pros and cons of the stock market. 

Yeah! It will take time but once they start to comprehend, they won't have to look back unless they run out of luck. 

There will be ups and downs, but you have to be patient enough to hope for the best to come. Failure and success are part of trading. One must manage both these phases wisely. And when you learn from the failure and make necessary upgrades in the methodologies for a promising success in the time ahead.

 

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