Market Basics
In Simple words, a share or stock is a document issued by a company, which entitles its holder to be one of the owners of the company. A share is issued by a company or can be purchased from the stock market.
Selling Shares
By owing a share you can earn a portion and selling shares you get capital gain. So, your return is the dividend plus the capital gain. However, you also run a risk of making a capital loss if you have sold the share at a price below your buying price.
Stock Prices in Shares
A company’s stock price reflects what investors think about the stock, not necessarily what the company is “worth”. For example, companies that are growing quickly often trade at a higher price than the company might currently be “worth” Stock prices are affected by various forms of company and market news. Publicly traded companies are required to report quarterly on their financial status and earnings. Market forces and general investor opinions can also affect share price.
Quick Facts on Stocks and Shares
Owing a stock or a share means you are a partial owner of the company, and you get voting rights in certain company issues.
Over the long run, stocks have historically averaged about 10 per cent annual returns. However, stocks offer no guarantee of any returns and can lose value, even in the long run.
Investment in stocks can generate returns through dividends, even if the price.
How does one trade in Shares ?
Every transaction in the stock exchange is carried out through licensed members called brokers.
To trade in shares, you have to approach a broker. However, since most stock exchange brokers deal in very high volumes, they generally do not entertain small investors. These brokers have a network of sub-brokers who provide them with orders.
Sub Broker
The general investors should identify a sub-broker for regular trading in shares and place his order for purchase and sale through the sub-broker. The sub / broker will transmit the order to his broker who will then execute it.
Active Shares
Shares in which there are frequent and day-to-day dealings, as distinguished from partly active shares in which dealings are not so frequent. Most shares of leading companies would be active, particularly those which are sensitive to economic and political events and are, therefore, subject to sudden price movements. Some market would define active shares as those bought and sold at least three times a week. Easy to buy or sell.