A complete guide on the stock market for beginners

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These markets are usually regulated by governments and function as forums through which companies can issue and trade shares, and investors can buy and sell shares.

The stock market consists of two main sections: the primary market and the secondary market. The primary market is where new stocks are issued and traded. The secondary market is where existing stocks are traded. The secondary market is what most people think of when they talk about the stock market.

There are several different types of stock markets:

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An exchange-traded stock market is a physical place where buyers and sellers meet to trade stocks. It may be a physical location where trades are carried out on the trading floor or an electronic system such as electronic communication networks (ECNs) and alternative trading systems (ATSs).

A stock market can be:

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(i) An Over The Counter (OTC) market is primarily composed of a network of broker-dealers that work together to bring buyers and sellers together for trade. The OTC model is the most common form of trading in stocks nowadays.

(ii) A stock market can be organized as an exchange regulated by the government or private entities. In some letter markets, security traders are not directly interacting with each other, rather, they are trading with the exchange that maintains the book of trade.

The stock market can be driven by various factors or activities in which investors are engaging. Some of these factors include:

Economic Factors

Governmental monetary policy spills over into interest rates and the ability to buy goods with borrowed money costs. Trade policies, tariffs, and political stability are some of the factors that can directly or indirectly affect the performance of companies, therefore affecting the overall performance of the stock market.

Political Factors  

Presidential elections or congressional session intervals are examples of political factors that directly impact how public companies perform in their given industry.

Technological Factors 

The increase in the popularity of the internet has increased the number of people using it to access information and trade stocks online.

Market Sentiment Factors

This is a factor that has been studied in recent years, in which investors form their own opinions about what they think will happen with a company in the short term and long term future. An example of this is the stock market crash of 1987.

Classification of the stock market:

Stock exchanges may also be classified as “national” (e.g., Nasdaq) or “international”. As of 2015, there are over thirty notable stock exchanges in the world with a combined market capitalization exceeding USD$30 trillion.

In terms of operating hours, as of 2015, there are 243 trade days in a year.

A stock market, equity market or share market is the aggregation of buyers and sellers (a “market”) of stocks (also called “shares”), which represent ownership claims on businesses. A stock market is a form of financial market where traders buy and sell securities, primarily company stock.

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