Wednesday, March 23, 2011

How Does The Stockmarket Work For Me?

By Gunawan Wibisono

Try turning on the news or opening up a paper. You can possibly read or hear something about the exchange. I am sure you have heard about stocks making a large amount of folk money and about folks going broke purchasing stocks, but just how does the exchange work?

Don't be concerned, the exchange isn't that tough to realise. First let's debate a market. A market is where products and / or services are purchased and sold. Think about a superstore. At the local supermarket, food and other products are acquired and sold.

In the market, stocks are purchased and sold, instead of food. When you own stock, you own part of a business this is called equity. When you own stock in an enterprise, you have equity in that establishment.

Stocks are purchased and sold on stock exchanges like the Big Apple Stock Exchange. The NYSE is one of the commonest exchanges, but there are stock exchanges across the world where stocks are bought and sold.

If you would like to make cash from stocks, you want to follow a straightforward process. First, you purchase the stock of an enterprise at a particular cost. Then, when the price has gone up, you sell it. The difference is the profit you gain.

To further rationalize it think about ebay. It works just the same as it is also a market. If you purchase a bike at a garage sale for $20 and then sell it on ebay for $75, you made a $55 profit.

You do not have to physically go and find somebody to sell you stock or find somebody to sell it to. When you have a broker account, you tell your broker what you need to sell or buy and they use the exchange to find the purchaser or seller.

This is essentially how the stock exchange works. It is not too complex. Just ensure you buy low and sell high. This is how you make profit. Do this at least much of the time and you may consistently win. Keep investing and you'll make extra money.

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