The share market, or the stock market, is a place for buying and selling stocks and is an enormous platform. You must know all the basics before becoming a trader here. So, let’s start with the basics for you all.
What Is Share Market?
A share market is a place or platform where an individual comes to buy and sell stocks of any company. It is also called the “Stock Exchange.” Share market is not a geographical place specific. It can be a virtual place or a geographical place where traders buy or sell stocks as they please. But, the exchanging of stocks must be done within a specific time limit, more specifically in a fixed hour. Let me give you an example; suppose there is a company called “XYZ,” and you are buying their stocks for $200. Now, you are a stockholder or shareholder of “XYZ” company. Since you’re a stockholder, it gives you the authority to sell your stocks anytime you like.
What Are the Types of share Market?
There are two types of share markets:
1. Primary Share Market
A primary share market is a place new stocks of a company are listed after those are registered. It’s called IPO. Later the shares are open to other market players for further trade.
2. Secondary Share Market
It is a place where the stocks come from the primary market so that traders can buy and sell the stocks. It is also called the “Auction Market.” That is because stocks are being auctioned in this market.
What’s Traded on the Stock Market?
Financial instruments that are traded in the stock market are:
A basic instrument in the share market that is traded mostly in the stock market, and it’s the basics for newcomers. Share is actually the portion of the ownership of any business. A company usually sells its shares to collect funds for the company. The person who buys the shares is called a shareholder, who has the right to sell the shares anytime to anyone.
2. Mutual Funds
This financial instrument is used to accumulate funds from various investors so that they can invest in the securities like stocks, bonds, short-term debts, etc. Mutual funds are categorized in four ways such as money market fund, bond fund, stock fund, and target-date fund.
In most simple words, a bond is a loan that is given by an investor to a company or government. Then the entity that receives the loan can use that fund for the necessary operations. Now, you can ask why the investor provides a loan? Well, the receiver has to pay the interest to the investor and can use the money for a specific period of time.
It is a contract that is held under at least two parties where they agree that they will derive the price from any underlying asset.
Share market is a big place where you can’t just jump in and make a profit. First, educate yourself, and then trade with confidence.