In the world of blockchain technology, you can often hear a common phrase ‘Stock Trading’, but do you know what it means exactly? First of all, the word ‘Stock’ in an everyday world refers to the capital which is raised by a corporation or a company through the subscription and the issue.
On the other hand, Stock Trading means selling and buying shares in a corporation or a company. This means that, if you have ownership of the stock, you now own one piece of that corporation or company. In other words, stock exchange refers to secondary markets where share owners are allowed to transact with potential buyers.
If you are thinking about stock trading, you have to be aware that it requires dedication, years of learning, good practice, and experience in order to become a real professional and learn how to grow your portfolio.
Let’s see who can do Stock Trading and how its market works today!
Who can do Stock Trading?
Although many people think that this type of trading is reserved strictly the domain of investment professionals, thanks to the digital revolution and development of the internet, this is no longer the case. Today anybody who has access to the internet via mobile device or a computer can become a regulated broker and start earning money online with trading stocks.
The reason many decide to try stock trading is because they are looking to increase their income via the internet. So, they find this practice perfect for that. People who really invest their time and energy into gaining knowledge about this particular field.
So, basically, any individual who is eager to learn as much as he/she can. As well and to have a lot of nerves for unforeseen circumstances and situations.
How does the Stock Market work?
When it comes to stock market functioning you have to be aware that investing in this type of market involves a certain amount of risk. Nevertheless, those who approach it with discipline and preparedness have nothing to be worried about since well-prepared investment in the stock market can increase one’s net worth.
It’s no secret that the wealthiest people of the world have the majority of their wealth invested directly in stocks. For this reason many people want to learn all there is about the stock market and how it works exactly. Billionaire investor Seth Klarman has shared his value investing philosophy through his book on Margin of Safety where the importance of discipline and patience was highlighted.
Millions traders and investors, thousands of transactions every day
This market is made up of millions traders and investors and there are thousands of transactions that occur each and every day. These traders and investors have their own vision of the value of the specific stock.
During the transaction process, the traders and investors are acting by selling or buying stock cause minute-by-minute gyrations in it during the course of the day when the trading is happening.
So, where exactly does this exchange take place online?
Stock Exchange Platform
The Stock Exchange is done on the platform that it provides. On that platform the trading process is very easily conducted by matching sellers and buyers of stocks. If anyone wants to access these exchanges, he/she will need a stockbroker who will be a middleman between buyers and sellers.
In order to get a stockbroker is best done by creating a specific account with a retail broker who is well-established.
Supply and Demand of the Stock Market and the Bid Ask
There are also the laws of supply and demand that the Stock Market offers and they work in real time. This means that there must be a buyer or a seller for every stock transaction. The stock price rise if there are more buyers compared to the number of sellers for a specific stock. In opposition to that, if there are more sellers, the price will fall down.
The bid-ask refers to the difference between the highest price that one buyer is willing to pay and the lowest one that the seller tends to offer. So, in case if a seller takes the bid price or a buyer accepts the ask price, then we are talking about the realization of the transaction.
Stock markets of high quality – conclusion
It’s very important to know that Stock Markets of high quality tend for high liquidity, having small bid-ask spreads, and good depth in general. It’s the same situation for large companies and individual stocks of the highest quality – they all tend to have the same characteristics.