Before you start with trading of Stocks and Bonds it is important to have a basic understanding about stock trading. Below mentioned are 3 Key understanding points about stock trading.
- Types of stocks
There are generally two types of stock: common stock and preferred stock. Common stock is essentially common as the name suggest. This is the type of stock that most people own. It usually entails buying stocks from the stock market that give you some amount of claim on the company. Preferred stocks will indicate some level of ownership in a company but may not confer to the owner voting rights. Preferred shares may guarantee the owner a fixed dividend that they will have access to forever.
- Where do stocks trade
Stocks are traded on exchanges that can be physical or virtual. This is where the buyers and the sellers meet to decide on the price. A typical physical trading floor will look like a mad market with people screaming their heads off. A virtual trading exchange is composed of a network of computers through which sellers and buyers from all over the world interact.
- Idea of Stock Exchange
Stock exchange helps to facilitate options of exchanging the securities among the sellers and buyers. This helps ensure that people do not have to go around their neighborhood and cities looking for whom to sell their securities to. It is suggested to check the HQBroker Reviews for a better understanding. There are normally two types of markets, primary and secondary market. A primary market is the place where securities that is; Initial Public Offerings, are created. A secondary market is where securities that have been created in the primary market are traded without the influence of any issuing company.
