Before going deep into Stock market, we must know what it is and how it works. A Stock or a Share is a financial instrument which represent ownership in the company and represents a proportionate claim on its properties and profits for example, an individual or entity that owns 100,000 shares of a company with one million outstanding shares would have a 10% ownership stake in it
The term “stock market” often refers to the group of markets and exchanges where regular activities of buying, selling, and issuance of shares of publicly-held companies take place
Just like when you want to buy some food or groceries you go to supermarket alike that when you want to buy stocks or mutual funds you usually go to buy them through online stock market which anyone can access with a brokerage account or employee retirement plan. For investing into the stock market, you don’t need to be an official investor, anyone can invest into stock market and become an investor globally.
The concept behind how the stock market works is very simple. Operating much like an auction house, the stock market enables buyers and sellers to negotiate prices and make trades. The Stock Market works through various network exchanges as you have heard about New York stock exchange or NSE India (National Stock Exchange India). Companies list their shares on stock exchange through a process called IPO (Initial Public Offering)
This all may sound difficult but all is done through computer algorithms, price setting calculations are done with Computer software’s, before stock trades took place in physical marketplace but now stock market works electronically through the internet and online stockbroker. Major Stock market indexes are referred by a term such as Dow Jones industrial Average or the S&P 500 because it is hard to track every single stock
Stocks and stock mutual funds are ideal for a long-time horizon it is not suitable for short term investment. If you want to do short-term investment there’s a great chance you want that money back and it took time to stable the market