Buying shares in a company means owning a part of the company’s assets, therefore directly benefiting from the company’s revenue.
An equity (stock) is the opposite of a share, where the holders are entitled to a fixed yield over the period of their ownership. If the company decides to liquidate, shareholders will be prioritized over equity holders when it comes to receiving their profits.
Trading stocks is considered therefore to be riskier than trading shares. Because of this, stock traders are generally rewarded with higher earnings as compensation for the potential risks they are taking. As a trader, it is important to know that you can earn a lot of profits if you invest smartly, and accordingly, you may lose your capital if you invest everything recklessly.
The stock markets represent an area where investors can trade (by buying and selling) stocks. The most famous stock exchanges in the world are the New York Stock Market and Nasdaq, both of them located within the United States.
The variations of prices in the stock markets
As an investor, you should know that stock prices can vary based on many factors. In order to have a complete understanding on how the system works, and to take wise decisions, it’s very important to know exactly what these factors are. Amongst them, some of the most important are:
- Supply and demand
- The revenue amount of the stock company
- The current financial situation of the company
- The general situation in the local and global markets
If you want to start trading stocks, it is extremely recommended to consult a trusted brokerage company and speak to a financial advisor, before starting.
Do not rush your investment decisions, and remember that there’s a lot of profits to be earned in this industry, if you invest wisely.
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