Basics of the Stock Market to Start Trading
Learn the basics of the stock market and learn how to start trading with this easy-to-understand guide for beginners.
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Stock is a kind of ownership where you own a part or a share of any company and share part of the profit that the company accrues. For example, owning some stocks of an organization named "Global", this simply means you own some shares of that very company. In other words, having x stock of "Global" means you own x shares of "Global". The company needs to earn a profit in the business to earn you profit from the stock you had invested in. The company on which your stock belongs has earned a profit. May give you cash or additional stock of some type with a little amount, called a right share, or an additional stock without any amount as a bonus.
What is the share market ?
Share market is the market where you can sell or buy stock of Public companies. On the share market you cannot buy or share stock of Private Limited companies. Only Public Limited companies are listed on the Share market. Which allows citizens to buy or sell stock of that particular company. The shares (Ownership of company ) of Private company will not be listed on Share market
Why is the share market important ?
Share market is one of the important markets that every country has. Share market is one of Best capital sources for business. If the company is listed on the share market that company will be able to receive Capital in exchange of company share from the Public to operate their business. To receive this capital from the public , the company should be listed as a Public limited company.
Why are companies listed on the Stock Market ?
As we have already discussed, Listing on the Stock market will help companies to collect Capital to operate business. To list companies on the share market there are various criteria from the government. Which we will discuss in the next article. The next source of capital for business will be “Loan” and “Direct Investment From Investor or Investing Company”. If a company issues a loan the company will have the next responsibility to repay “Principal” amount of Loan with “Interest” of Loan. Which might add the next burden to the company. Third option is “Direct Investment From Investors or Investing Companies”. In this option companies should find Individual investor or a Investing company who are interested in investing in our company.
If we compare these 3 methods, Listing our company on Share market can be very beneficial because the company can receive a huge amount of Capital which allows the company to fully focus on Business growth and make Profits with no responsibility to pay timely Interest of a loan.
Advantage of Share Market to Government ?
Government can make a huge profit from the share market along with Public companies and Public Citizens. When the citizens buy or sell the stock , The government will receive a certain percentage of Tax from each share Trading. This is one of the best income sources of the Government. Additionally if the company makes profits the government also benefits from the profit while the company pays the tax to the government.
Advantage of Stock market to the Country ?
As we have already discussed, the Government receives Tax from each stock trading. Which is one of the major sources of income for the government. The Tax received by the government will be invested for the Development of company resources and Infrastructure. With proper policies of the Government the stock market can attract more investors to invest in various companies of different sectors. Which will help for the growth of different sectors of the country.
Advantage of the Stock market to the Public Citizen ?
Starting a company is challenging and everyone cannot start a company. If an individual or a group of people starts the company it is very challenging to make a profit and make the company profitable. It is always good to be part of an existing company or New company which is started with a certain goal. Many people want to invest in a company but they do not find the company or a business to invest in. Stock market allows investors to be part of a company by purchasing Stock of companies Listed on Share market and earn when the invested company earns profit. There are 2 Ways how Investor can earn profit from Share Market :
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Receiving Bonus cash or share from Company
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Selling Stock of company on Higher Rate which we have purchased on Lower Rate. ( Which is done based on Analyzing Stock , Company Performance and many more )
