[Hot News] What is a stock?

A stock is a legal tender that represents a company that has gone public and trading on a stock exchange. Some of the examples of such publicly listed stock bearing companies includes Apple, Microsoft, Facebook, Google, Yahoo etc.

However, it must be noted that not just bigger companies, but even several smaller companies of which names you might not have heard a lot can also be listed and traded in a stock exchange.

By buying a stock of a company through a stock exchange, you become a part of the ownership of that company. However, if you own only a smaller amount of stocks of a large company, say for example about 100 shares of a company that has 400 million shares of it available in the stock exchange, then you really own just 0.000025% of the company.

The price of a stock of any company is always volatile and keeps moving up and down. Whenever the stock prices move above the value you bought it at, you would have made a profit and whenever its value reduces from what price you bought the stock at, you would have undergone a loss. However, either loss or profit of any share is not applicable to you until and unless you decide to trade the stock that you own at any given point in time.

Thus, if you decide to trade (as in sell) a stock at a time when its valued at a price higher than the price at which you bought it, you will be making a profit while on the other hand, if you decide to sell it at a time when the stock's value is lower than the stock price at which you bought one, you would be incurring a loss of the stock investment.

The way a stock's price moves is heavily dependent in the way that corresponding stock's company is performing in the market. If the company is doing really well with its profit margin, the stock price will obviously go up because people as in stock traders would hold on to the stocks without wanting to sell them. This results in an increase in demand for that said stock by the buyers who want to buy them, causing the stock price value to go up.

On the other hand, if the company is not doing well on its profit margin or incurring a net loss every quarter, the stock holders of that company may decide to sell the stock off, causing an increase or surplus in stocks of the said company in the stock market available to be bought. As a result, the stock prices will be reduced due to increased supply of stocks than there is a demand for the stock to be bought by a stock trader.

So, in a way, whether a person can make any profit or loss in the stock market solely depends on his knowledge and confidence level he has over any company and his capability to make the right speculations while trading the corresponding stocks in the stock market.

[Hot News] What is a stock?

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