A stock market comprises an establishment that facilitates the trading of publicly listed shares. As companies look to expand their operations and grow their businesses, they need additional funds. There are two ways to raise capital, i.e. via debt or equity. The equity route drives such companies to the stock market.
With a rise in technology and an increased awareness of the stock markets, more individuals are being driven toward understanding the working of stock exchanges and getting an insight into how they can make profits by investing their money. This article aims to cover the fundamental concepts of the stock market along with an insight into its working.
Types of stock markets
Stock markets are primarily divided into two categories.
- Primary Markets – Companies seeking to list their shares on an exchange for the first time may do so through an initial public offering (IPO). Investors can subscribe to these shares in the primary markets.
- Secondary Markets – As shares are issued in an IPO, the company gets listed on a stock exchange. The shares now enter the secondary markets, where they can be traded freely among investors depending on their current market value.
How to invest/trade in stocks?
Stock trading can be done through online/offline trading. Online trading refers to trading in stocks using multiple platforms, such as the stockbroker’s website and smartphone apps. On the other hand, in offline trading, investors can visit the broker’s office or contact them by phone to provide the necessary instructions.
What is a Demat account?
A Demat account performs the role of a depository that stores your financial securities in an electronic form. The account allows users to access all the information about their investments in a single location. Additionally, investors must open a trading account to buy or sell securities.
How to use apps for trading in the stock markets?
While online trading offers numerous benefits, trading apps have simplified the entire trading process. Users have the flexibility to operate a simple interface to buy/sell shares, securities, and financial products by following a few easy steps.
Let us understand how this works. When a trader places an online order through an app, the order gets saved in the database of the exchange platform and trading member platform. A thorough search is then conducted, ranging across all platforms that sell the specific stock and display the best price available. Users confirm the order if the generated price matches their demands. As trade is completed, a broker takes up to three days to credit the amount to the user’s account.
Benefits of using online trading apps
Online trading apps offer many benefits, some of which are mentioned below.
- Simple Interface – Most apps provide a simple user interface that supports new investors in executing their transactions.
- Faster – Apps facilitate a faster trading process wherein users can quickly execute their trades and capture profits even from small movements.
- Trade on the go – Users often find themselves juggling their busy daily routine and keeping track of the market swings and turns. Trading apps offer greater flexibility as users can use their smartphones to keep track of their holdings and make transactions easily in a simple way.
- Wide range of features – Most apps provide extensive features such as stock research and analysis, technical indicators, stock news, company press releases, etc., which help users make better decisions.
- Secure Trading – Trading apps provide greater safety and security in all aspects of trading activity.
How to pick stocks for trading?
Traders and investors must conduct thorough research before selecting stocks for their portfolios. There are primarily two approaches involved in the stock screening process.
- Fundamental analysis – This approach involves assessing the fundamentals, such as understanding the business model and financial statements and analyzing the growth and profitability.
- Technical analysis – This is an excellent approach for investors who intend to maximize their gains by analyzing the current price-volume trends and forecasting future price movements.
The stock market offers tremendous opportunities to earn additional income. Multiple trading apps provide extensive opportunities for investors to make profits in the stock market simply and hassle-free.