Traditionally, the scope for financial development was limited. But now we live in an era where technology has given us a new pathway to enter a limitless world. We have seen parents educate their children to save money so they can fight against future risks. However, this generation is aware of this generation gap; they donât want to idle their savings. Instead, they admire choosing the path of investment.
This content covers the conceptual theory that aids the ones trying out stock trading for beginners. We will cover a beginner-friendly topic to clear your doubts and motivate you to keep investing, but do not depend on it.
What is stock trading?
It is a platform that large-scale companies provide to their investors and traders. A simple definition of stock trading explains that here buying and selling of shares in companies occurs in exchange for money. Understand that when you buy any company stock, you gain a piece of ownership. Stock traders are classified into three categories
- Informed Traders
- Uninformed Traders
- Intuitive Traders
Apart from them, the common traders in the market are-
- Swing Traders,
- Day Traders,
- Momentum Traders
- Buy and Hold Traders
Once a certified financial planner, Nathaniel Moore stated, âTrading isnât for the faint of heart.â We strongly agree with this. However, if you are willing to trade stocks, you should prepare yourself first.
What is the primary and secondary market?
The stock market is bifurcated under two verticals, i.e., the primary and secondary stock markets. A primary market is one where securities are created and first bought. On the contrary, the secondary market in which trading occurs among investors, with the stocks from the primary market further being bought and sold.
Furthermore, in a primary market, the companies sell new stocks and bonds to the public for the first time, like an initial public offering (IPO). The secondary market is the stock market that all beginners are eager to enter. This market includes:
- Dealer Markets,
- Auction Markets,
- The OTC Markets,
- Third & Fourth Markets.
What are the characteristics of a stock trading market?
We know that in your schooling, you might have come across the topic âCommerce students should know better.â But, many of us didn’t focus on it. So, here, we are just trying to brush up on your concepts. So, there are six major characteristics of the stock trading market.
Organized Body
The stock market is an organized body with experts and managers who take care of the stocks purchased and sold to and from the companies. Make sure you also understand cryptocurrency. Although, they are two different entities. However, while trading in stock, there are authorized policies and terms and conditions to place the exchange.
Traditionally, face-to-face dealing was widespread; still, it is running in the market. After technologyâs evolution, this practice was taken to electronic mediums, but it runs in a centralized manner. Cryptocurrency on the other hand is an electronic medium, with a decentralized operation.
Public Company Stock
In the stock trading market, public company stock plays a vital role. The stock purchases and sales in this market are made through the public stock exchange. Therefore, one should ensure that when selling a stock, it must be listed on the exchange. A public company will always be transparent on two factors, i.e., finance and business, because they can change the game. It can hamper or appreciate stock value as well as safeguard their investors.
Trading Through Brokers
Stockbrokers and traders should ensure that they have entered the system. Their name should be registered in the exchange; they can only legally become part of the deals.
It is simple. An online and offline platform both demand registration. Nowadays, you need to create a brokerage account.
For some, brokerage services are provided as a part of an employer-sponsored retirement investment fund. The individuals seeking the stock market for beginners should know that if they want to trade, they need to fulfill one condition, that their individual account too should be listed as a member of the exchange.
Going Public with IPOs:
Worldwide, IPOs are a valid tool that many companies use as a public offering to induce their capital and commencement in the market. IPO stands for Initial Public Offering, which occurs in the primary market, but as investors show interest, the trading of IPOs shifts to the secondary market, where trade happens.
Supply and Demand Price Fluctuations
The supply and demand price-affecting indicators depend on the companyâs brand value and credibility. As a result, there could be various vulnerable reasons for the companyâs stock.
Stock Market Prediction
According to the books, stock market prediction is all about reading indices. Of course, in an online platform, you have the privilege of understanding specific points, but ultimately it is equally important that a proper analysis, research, and observation is undertaken.
What are the types & methods of stock trading?
Many beginners and newbies are looking for types of options in the stock market, and how one can perform it is what they are wondering about. So here, we are putting the types in a glossary to build an idea.
Types of Stock Trading | Meaning |
Intraday Trading | It is day trading where all sorts of buying and selling occurs on the same day. The entire transaction is completed in a day. |
Position Trading | It will provide you more time than Intraday, allowing you to hold the stocks for months based on price temperament and technical trends. |
Swing Trading | This type allows the trader to hold the stock for more than a day, reducing risk factors. |
Online Trading | It is just a medium-to-run stock market that includes different types of digital trading. |
Short-Term Trading | The time limit in this trading is present day to one week. One can expect significant results. |
Medium Trading | Here, you can hold the stocks for months. Side-by-side, you can follow the trend to reduce the risk of loss. |
Long-Term Trading | It allows an investor to hold the stocks for years based on fundamental analysis. |
Conclusion
Stock market, in recent times, demands investments made only by willing youth. If you want to become an investor, you can. But it requires an ample amount of company knowledge, tips from the experts, and stock value analysis. In this blog, we combined several short topics in a summarized manner so that our readers can understand the gist of it. Have a great time investing!