STOCK EXCHANGE BASICS

Most have a hint of the stock trade, however, incomplete and often misguided. Read the article carefully and check your knowledge about the basics of stock exchange from it. First of all, what are these stocks? Before knowing about the whole process of the business, you need to know that these are floated by companies when they want to expand their business. That is, if a company becomes huge enough to be trusted, it floats these. The people who buy these are actually offering money to the company to help it in its business. Now it does business with this money. Since it does business with this money, it also gives a part of the profit drawn from the business to the investing person. This share is actually proportionate to the amount of share price the person owns. However, the process is simple, without much intervention of a broker till now. It is only that the person having done stock investing is called the share holder now, not a trader. This is about the primary sale.

A company sold it and a person bought it. The company gives the person a part of its profit. What is the thing called a day trade then? What are these exchanges meant for? The sale of shares from the company whom it really belongs to, directly to the person is called as primary sale. A company generally has no control of its shares after this point of time. Suppose that a very renowned company sells these in the market. Also side by side, a company with low performance sells its ones. There is no function of stock broker till this point. Both sell the shares at the same price that they are going to invest into their business. But whose ones do you think will get higher demand? Obviously, the renowned company is the one.

This is the principle on which the whole process operates. The renowned company's growth is very imminent and hence the person holding its portions will get a greater profit. The shares will thus have a great demand. And the person who invested into the renowned company would sell these at a much higher price. This stock trade traditionally takes place in stock exchange. In a similar way just the opposite happens to the shares of a company that sees a doom. They become a burden to the holder; because either they give no profits at all, or the profits incurred are too meager to be called well, lower even than what one can easily get from a bank deposit. This causes a decrease in demand of these holdings. Then its price in the market declines.

Thus the prices of stocks rise and fall with the economic future of the company as observed by the people. If the company looks to rise in the future, the price increases. Whereas if its future looks dark, the price decreases as the people in the market are more intended towards selling. It is all about demand of the stock. If a company that was not performing well in the past suddenly starts succeeding, its shares suddenly see a rise. The converse is true when a well doing company suddenly starts losing its hold on the market.

Here comes the importance of the brokers. He acts as a mediator in the whole trading process and also helps in maintaining your financial portfolio. The online stock broker is a website that employs software to serve you in online market trading giving you the advantage of very low commission rates and is also more convenienent.