An exchange where the stocks or equities are traded for raising funds and capital for investment is called a stock exchange and the exchange of the shares is called Stock Trading. This is a place where the buyers and sellers gather to sell and purchase the shares in order to maximize their investments.

Stocks are also known as shares and there are securities which are listed on the exchange and there are many which are traded privately. There are companies which are traded in the stocks of the countries where they are registered or these may be traded in the exchanges of other countries as well.

How the trading is done?

At the stock exchanges, the companies list their shares to transact business or they share it via a dealer which is called over the counter trade or OTC. Stock is a security that is traded in lieu of money and its value keeps on rising or falling as subjected to market risks.

Participants in the stock exchange are as follows:

• Banks
• Pension funds
• Insurance companies
• Hedge funds

The trading of stocks is done on exchange or virtually and for that you need to have trading account.

The markets forces!

Basically there are two types of markets:

• Primary
• Secondary

For the introductory venture into the capital market, IPO is launched and that is done in the primary market. So, this is the trading platform where a security of any firm is created and the previously created shares are being traded on the secondary market. The term” stock market” is actually the secondary market that is referred to.

How the stock prices vary?

As aforesaid, the price of the stock varies as per the market forces that are driven by various factors on a global level. When the rise of a share goes up then investors feel that this company is reliable and vice versa. The value of the company is characterized by market capitalization and the value of the stock has nothing to do with that.

In case of public companies, the earnings they make should be made for four times a year. It is actually the supply and demand chain that decides the value of the stock but this plank seems to be complicated when in execution on a global level. It is only through a consistent study of the trends in the stock market that one can invest wisely here.