The Stock Market at a Glance
To achieve the much-coveted financial independence, you need to earn, save, invest and protect your money. But, out of this bunch, stock market investing is no doubt the most intimidating and off-putting.
It doesn’t really come as a surprise, though. After all, there are numerous confusing terms that you need to understand. Add in the fact how volatile the stock market can be with lots of ups and downs and risks.
Unfortunately, when you are not familiar with the ins and outs of the stock market, it is easy to just ditch the idea of investing.
But, it doesn’t have to be this way.
Here is a short guide that will open the doors to the world of stock market:
Stock Market – What is It, Anyway?
Before anything else, it is best to define what the stock market is in the first place.
To put it simply, the stock market is a place where investors can sell and buy stakes or securities in both individual companies and ETFs or exchange-traded funds. The concept of the market is also used for trading other items including treasuries and bonds although the most visible and known to the public is the stock market.
The stock market, also called securities exchange, as its very own set of rules and is subject to the regulation of the government. The largest stock exchanges in the world are Nasdaq and New York Stock Exchange (NYSE). Exchanges are the systems and places where stocks get traded.
Even though Nasdaq and NYSE are the biggest exchanges in the world that receive the most attention in the US, there are still other stock markets all over the world such as the London Stock Exchange and Australia, Shanghai, Hong Kong, Japan, India and different European Union locations.
Analysts use indexes to follow the overall market’s performance. Securities market indexes indicate the performance of the stock market. The indexes measure a weighted average value of the collection of securities.
Among the major indexes include the Nasdaq, the S&P 500 and the Dow Jones Industrial Average (DJIA). Once an index drops, this means that the average value of all stocks in that index is down from the business day before.
On the other hand, if the index is on the rise, this means that the average value of all stocks in that index is higher from the previous day. There are exchanges with indexes that are also related to their performance. For instance, there is the Financial Times Stock Exchange 100 (FTSE) for the London Stock exchange.
These securities are selected as a sample reflecting the behavior of the market as a whole. However, since these indexes include companies from various industries, these are considered as solid indicators of the overall condition of the United States economy.
If you will really think of it, the stock market isn’t such a scary place at all. Instead, you can consider it as a regulated and safe auction house where sellers and buyers can trade investments and negotiate prices. So, be brave and give it a try!