Stocks

Stocks

Stocks, also known as equities or shares, represent ownership in a company. When you own stock in a company, you own a portion of that company's assets and earnings proportional to the number of shares you hold. Here’s an overview of stocks and how stock trading works:

Basics of Stocks

Types of Stocks

Common Stock

Most stocks traded on public exchanges are common stocks. Shareholders typically have voting rights in company matters and may receive dividends.

Preferred Stock

These stocks have preferential treatment in terms of dividends and liquidation but usually do not carry voting rights

Buying and Selling Stocks

Stock Exchanges

Stocks are traded on stock exchanges such as the New York Stock Exchange (NYSE), NASDAQ, London Stock Exchange (LSE), and others.

Brokerage Accounts

Investors buy and sell stocks through brokerage accounts. Online brokers facilitate transactions, provide research tools, and offer trading platforms.

Stock Indices

Indices like the S&P 500, Dow Jones Industrial Average (DJIA), and NASDAQ Composite track the performance of groups of stocks. These indices serve as benchmarks for the overall market or specific sectors.

Market Order

An order to buy or sell a stock at the current market price.

Limit Order

An order to buy or sell a stock at a specific price (or better).

Stop-Loss Order

A conditional order to sell a stock if its price falls to a specified level, limiting potential losses.

Stocks play a crucial role in investment portfolios, offering potential for capital appreciation, dividends, and portfolio diversification. However, investors should carefully assess their risk tolerance and investment goals before investing in stocks.