The stock market is one of the oldest and most established investment models in the history of the world economy, basically the markets where companies offer their ownership to the public or individual investors through stocks. In these markets, individual investors can be partners in the future of companies.
Thanks to this partnership, companies access the financial resources they need, while investors make a profit in possible growth situations.
Within the scope of stock market functioning explained, in this market where the prices of stocks are determined according to the supply-demand balance, the increase in interest in a stock increases its value.
Making a profit with this investment model and protecting their assets safely is possible not only for professional investors, but also for beginner level investors if sufficient knowledge and experience are provided.
How Does the Stock Market Work?
Stock market can be defined as basically the markets where investors buy and sell shares issued to the public. These shares are official documents that allow companies to offer their ownership to the public in return for certain fees and offer partnership.
An investor acquires partnership rights in that company in parallel with the amount of shares they purchase. In the future, they can make a profit from the financial growth of the company to which the purchased share belongs and provide dividend income.
As in many financial markets, the stock market also operates according to the supply-demand balance. Companies, investors, regulatory institutions and intermediary banks are the participants of this market.
If we consider it within the scope of the beginner guide to stock market trading, a simple definition can be made as the stock market is the market where companies offer partnership shares to individual investors.
What Is a Stock Exchange?
Stock exchange definition can be made as platforms where stocks are listed. Through these platforms, companies offer their ownership rights to investors.
By the same operation, investors also acquire partnership rights at certain rates by purchasing these stocks through stock exchange platforms.
One of the most popular stock exchange examples today is the New York Stock Exchange. Businesses and investors on this platform, which has many participants, are in constant interaction.
In public offering periods called IPO, companies issue their ownership as stocks for the first time. Companies that start trading on stock exchanges become available for investors to become partners.
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What Is the Over-the-Counter (OTC) Market?
The Over-the-Counter market basically covers stock trading outside of stock exchanges. In this market example, where smaller companies issue more stocks, prices are usually determined by mutual agreement of investors and companies.
This leads to low transparency, unlike the supply-demand balance in the regular stock market. Thus, liquidity risk occurs. Therefore, the possibility of manipulation is higher in OVC markets.
Therefore, investors who want to explore opportunities in OVC markets should be more cautious. We should emphasize that it would be logical to create a bias against OVC markets within the scope of the over the counter market overview for both beginner and professional stock market investors.
Who Are the Main Participants in the Stock Market?
The stock market includes many participants. In addition to the participants, it is directly affected by many factors such as macroeconomic data. The main participants who have different roles in the stock market can be listed as follows:
- Individual investors
- Institutional investors
- Intermediary banks
- Market makers
- Regulatory institutions
These elements are examples of "main participants in the stock market" almost everywhere in the world. You can now take a look at BlueSuisse and protect your capital digitally for the long term.
How Are Stock Prices Determined?
Generally, the price of a stock, as in other financial markets, is shaped by the supply-demand balance created by investors and companies together. When investors' interest in a stock increases, the price increases due to the increase in demand.
However, when the selling pressure increases, the price will decrease. Basically, the price of stocks is determined in this way, but external factors such as companies' balance sheets, sectoral developments, macroeconomic indicators, and political developments can also cause fluctuations in the prices of stocks.
These processes are sufficient to explain the "stock price determination process". With BlueSuisse, an investor-friendly platform, you can also earn passive income through stocks on your journey to financial freedom.
Stock Market Hours and Trading Sessions Explained
The stock market hours and days may not be open at the same time all over the world. However, they all have similar dynamics. A stock market day consists of 3 parts: opening session, continuous auction, and closing session.
Due to the time difference between countries, transactions can be made on different countries' stock exchanges at different times. Within the scope of the market hours and trading sessions guide, stock exchanges are generally open for trading on weekdays and during business hours.
Thanks to the development of today's digital investment tools, it is possible to trade digitally from different stock exchanges at the same time.
Types of Stock Market Orders: Market, Limit, Stop
As in every dynamic investment market, the stock market also includes different order tools.Here are the most popular types of stock orders market limit stop.
The most common order types can be listed as follows:
- Market order: Investors make a transaction immediately at the current price through a market order. When the order is given, the purchase or sale is made at the market price within milliseconds.
- Limit order: In a limit order, you set a limit such as a maximum of $ 100 to buy a stock and the order is completed when it reaches the price you specify.
- Stop order: A stop order is usually intended to protect profits. It reduces the effect of emotional decisions on your investment processes. It allows you to be strong and sustainable in possible market volatility situations.
These order types basically include 3 different scenarios such as making an immediate buy-sell transaction at the market price, making it when it reaches a certain upper value and making it fall to a certain lower value. If timing and the right order type are managed correctly, you will have successfully managed risk management.
Understanding basic concepts and tools such as these and developing “understanding stock trading mechanics” skills are necessary for more profitable management of investment portfolios.
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