Home » Finance

Basic Facts About the Stock Market

Jul 31, 2008
You can't go far in today's world without hearing something about the stock market. Unfortunately, the media take for granted that all of us in the audience understand the stock market. The good news if you don't have a clue how to interpret all of those stock symbols running in the ticker at the bottom of your screen you're not alone.

But that's about to change. Below is an overview of some of things you need to know about the stock market.

Stock Market Background

The purpose of the stock market is to allow businesses to grow and to let investors have a way of earning money. Let me give you an example on a very small scale. Your child opens up a lemonade stand in your neighborhood for a week. She earns a decent profit and decides to open up a second stand at her grandparent's house. Unfortunately, she doesn't have enough money for the expansion. Other kids could pitch to cover the costs and receive a portion of the profits she makes.

That's exactly what happens every day in the stock markets all over the world with thousands of different companies and millions of stockholders.

How to Invest in the Market, Stock Purchasing Guidelines

If you want to purchase stocks, you'll want to form a relationship with a stock trader. These are individuals who work in the stock exchange, through virtual stock exchanges, or with trading software. You'll give them your money, tell them what you want to buy, and they'll complete the transaction on your behalf. For this service, they do receive a commission on the transactions.

Some people also use their traders for stock advice. However, you can make your own choices about which stock to buy. Obviously, the secret to making money is to purchase stock at a lower price and sell it at a higher price. That may sound overly simplistic but it's this thinking that drives all investors.

Another idea to understand is supply and demand because this affects the prices in the market; stock prices go up and down based on this basic principles. For example, if lots of investors realize that big is happening for a company they may all decide to purchase stock in that company. That decision increases demand for that stock thus raising the price. On the other hand, if the same company has a poor financial quarter many investors may start selling off stock which means the supply is increasing and the price drops.

Earning Money from Stocks

Another question you might have is how you earn money from the stocks. As a stockholder, you receive a portion of the company's profits. When the company determines their earnings and deduct all of their expenses, they are left with their profit. That profit is divided by the number of stockholders and each receives a portion. For example, if you own 1% of a company which generated $2 million in profit then you would earn $20,000 for your stock. If the company doesn't make any profits, however, you don't receive anything.
About the Author
I have a degree in Computer Systems Engineering. I've been working in the world of forex trading and stock market investing. I also have been building a variety of websites for the last 3 years. For more information about Stock Market visit Stock Market - MarketStock.net For more information about Forex visit Forex - MarketStock.net
Rating:
Please Rate:
(Average: Not rated)
Views: 215
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources