Stock is the actual stocks in which ownership of a company is vested. In plain English, the stocks are collectively referred to as “stock.” A single share of stock represents a fractional ownership percentage of the whole stock. The more the number of stocks owned, the more ownership rights the shareholder has (i.e., he can sell or buy a certain amount of stock at a given price).
The value of stock can be determined by looking at how it affects the value of other stocks. In simple terms, when an investor wants to purchase stock from another investor, he pays for the stock by way of cash. This transaction then allows the owner of the stock to either sell his shares or buy new ones. The stock prices will fluctuate because of varying demand and supply of these stocks. This is also known as the fundamental valuation of stock.
There are two ways to enter the stock market. First, an investor can buy shares from the company or an agent. Secondly, he can sell shares of stock from his account. Both ways allow an investor to reap profits by way of dividends. If you want to buy stock and sell shares of stock on the same day, you have to buy the stock from the same broker who is allowed to buy and sell stocks on the stock market.
Stock investors can buy new shares by purchasing them from the company after the end of an initial public offering (IPO). Initial public offering refers to the date on which the company first listed its shares on the stock exchange. After the initial public offering, the stock price may change depending on the changes in the economy and the general outlook of Wall Street. An IPO is a highly anticipated event; therefore, most institutional investors usually participate in it.
Private sales refer to selling your stocks through brokers or banks without the need to rely on the stock exchanges. In most countries, private sales can be done through registered brokers. It has also become popular in developing countries such as India and China, where it is possible to own stocks directly without much regulation. However, most private sales are not as successful as public sales; because there is no guarantee of appreciation.
The trading of stocks can be done through stock exchanges that allow direct trading between buyers and sellers. The exchanges allow companies to list their securities for sale, under a variety of circumstances. There are also other institutions that allow traders to buy and sell stocks through the Internet. Usually, these are the larger banks or brokerage firms.