While being mentioned almost daily by friends, co-workers, family members and the media, shares and the market remain unknown entities to many people. They can often be a cause of fear and curiosity. The market goes up; people make money. The market goes down; and people lose money. That much is known. But how does this happen? To an outsider, this seems like a series of random and unforeseeable events that come together to create situations beyond the control of companies and governments worldwide. However, with some base knowledge to start with, the myths and unknown fear that the share market can cause will leave your mind for an understanding of how this complex area works.
Some Important Things To Know
When starting out in the market, or if you are thinking about moving into shares and trading, there are a few facts and terms that will help you to understand more about the market, and may also allow you to make smarter choices with your buying, trading and selling.
• Stock Broker: Many of us have heard of the term stock broker, and know that it’s a career based in the in the stock market, revolving around buying and selling.
A stock broker acts as a middleman between buyers, sellers and traders, taking a small commission on each trade. The final selling price agreed upon will be agreed upon mutually by the buyer and seller. A stock broker will listen to what you say, and are not a financial planner or adviser. • The Difference between Stock and Bonds: Despite the fact that stock and bond are investments, what you are entitled to and how both work are quite different. A stock is a part of a company that you own, meaning that the value of the stock rises and falls with the company. (Find out about Term Deposits. Also make sure to visit Forex webtrader.) A bond is a loan you have made to a company, with the possibility of your money being returned with interest within a certain timeframe. While it may seem that stocks are riskier than bonds, if a company goes bust or default, the money invested in the bond is lost completely. When the bond is matured, the company is forced to repay the loan, and the amount of interested accumulated is at an end. • Blue Chip Stocks: A blue chip stock as a special name, as this type of stock has something that many others don’t. A blue chip stock is seen as a safer share to own than other types, due to the strength of the area or the company, and a low possibility of the shares losing value quickly or without warning. Types of blue chip stock include some mining and oil companies, computer and technology corporations etc. A Dividend: If you own stocks in a company that makes a profit, you may be paid a dividend for your investment and shares own. For example, if a company records a profit and tells investors they will receive a dollar in return for each share owned, and you own 1000 shares, you will receive 00.