With the increase in purchasing power and surplus income of people, the stock market has assumed a very important role in the lives of individuals - whether working in an MNC or running a business. The name of Mumbai conjures up the image of the Bombay Stock Exchange (BSE) with stock traders bidding for stock prices at the top of their voice. Apart from stock exchanges and bidding, much more is involved in stock market trading - it is related to individuals' innate nature of profit making.
This article educates readers on the simple terminologies related to the stock market - it is a place where individuals or companies sell/purchase shares at a price agreed upon by both parties. Organizations may want to raise capital for expanding their business. For this, they first get themselves listed in the stock exchange. Then they issue small shares of a portion of their capital and sell those to individuals or companies through the stock exchange. In other words, stock exchange facilitates the buying and selling of stocks, called stock trading, which may happen at a real or virtual exchange. Trading happens when a potential buyer bids for a certain price on the stock and the seller agrees on that price.
The stock index indicates the price of any stock at a given time. In New York Stock Exchange (NYSE) and BSE bidders and sellers carry out stock transactions on the floor; these are physical exchanges. The NASDAQ is a virtual exchange or an online stock exchange, where buying and selling happens over a network of computers and is known as online stock trading. Instead of a physical index an online stock exchange uses an online index to list its share prices. Stock traders are individuals who invest small amount of capital in stocks. Stock brokers are individuals or firms who hold stocks and trade them to smaller investors, thus having a role in temporarily controlling the prices of shares. The demand-supply gap determines the price of shares in the market. Stock trading is largely dependent on prevalent economic conditions; it rises with the booming economy and falls with inflation grasping the world order.
Be it a businessman, corporate personnel, or housewife, buying and selling of shares can be an easy way of earning (or as a matter of fact losing!) money sitting at home. This has been made easier through the services of various brokerage firms. They are professionals dealing in share trading and it is advisable to use their services when entering the stock market. The fluctuations in share prices are displayed in stock indices on a real-time basis. The time for which one can bid in the stock market is called its trading hours; for example, for NASDAQ it is 9:30 am to 4:00 pm. Some individuals trade within the trading hours of a single day, that is, buy shares when the market opens and sells them before the market closes. They are known as day traders who follow day trading of stocks. An institutional day trader works for some financial organization, while a retail day trader works on his own or with partners.
Online stock investing has opened up new vistas for share trading for common man. With information on cheapest stock trading now only fingertips away, they can learn about companies and the trends in the stock market to make prudent financial investments. In short, the stock market and trading in shares has become a second nature for the urban population of today's world.
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