There are so many investing options available in the market. However, if you are eager to take risks and make huge profits, then the stock market is for you. Understanding the stock market concepts is significant if you wish to invest in the market. To be a good investor you should try to know all the crucial concepts of the stock market.
1. Stocks:
A stock allows investors to own a part of a company. Stocks are a piece of ownership in a company traded by investors. The company’s performance along with other factors decides the stock price. When the value of a stock changes, the shareholders will gain or lose money. Stocks can be classified into various types based on sector, market capitalization, and dividend type among others. With a small cap investment portal, you can learn about this basic concept of stock market.
2. Bull and Bear Markets
A bull market is when prices are climbing. It indicates that investors are confident and optimistic. A bear market in contrast is when prices are falling. It often happens when investors are worried about the economy.
3. Market Capitalization
Market capitalization or market cap is the total value of a company. It helps in knowing how big or small a company is based on its market cap.
Market Capitalization= Total No. of Outstanding Shares × Current Share Price
For Example: If the total outstanding share capital of a company is 100 million and the current share price is 5$ then the market cap will be:
Market Cap = 100 million × 5 = 500 million
Based on capitalization stocks can be
In this case, if the share price drops to 4$ then the market cap will be 400 million which creates 100 million difference. Generally for beginners, small cap investments are considered the most preferred option.
4. Portfolio
The term portfolio in stock trading means types of investment in the share market. Portfolio management is a technique that provides investors the option to invest money in different stocks. It is also a way of controlling the risk in the investment.
5. Dividend:
The dividend is a portion of the net profit paid by a company to its shareholders. While a major portion of the profit is kept by the company for business activities. A portion can be allocated to the shareholders as a dividend.
How does one own a Stock?
Owning Stocks is simple. You need to open an account with a brokerage. This enables you to place an order to buy a stock. However, you need to take care that the brokerage you have an account enables you to shop for the particular stock you want to buy. You now not got to own the physical piece of paper Stock but own it electronically. You’ll get paid quarterly dividends from the company if they’re issued. It is important to have stock market information before you decide to invest in a stock.
Conclusion:
Stock trading is a serious thing and it must be done thoughtfully to earn solid returns. Rushing into the domain without proper knowledge can prove to be risky. Know stock market basics and learn how to manage and make investments in the field. This will ensure that you are fairly confident about your decisions when you venture into this field.
