The Way Stocks Work

By Mara Hernandez-Capili

Stocks are shares acquired from a publicly listed company. As a shareholder, one is considered as a part-owner of the said company and has certain privileges such as voting rights. A shareholder also receives an annual dividend from the companys annual profits. Dividends are computed like this: suppose you were able to buy 1,000 shares of MAC Company and the company has profits of about $7.5 billion annually that possess 750,000 shares all-in all. Your annual dividend would then be estimated to around $10 million. That is just how simple stock works.

Stock Trading is the activity of buying and selling of stocks. It is oftentimes called as stocks exchange. It is entirely difficult and time consuming for a person who wants to sell shares of his company, by running down an ad or spreading the news through word of mouth. That is the reason why there are exchange floors. Exchange floors are venues where sellers and buyers (traders) meet on one roof- well; those are actually brokers that do the job for them.

The New York Stock Exchange is the primary and largest exchange floor in America today. It features the sales that are up for grabs and also its values and worth. We normally see the exchange floor as bursting with chaotic activity. The exchange floor is where brokers receive a call from their clients who want to buy a particular number of shares for a specific company. The brokers then find traders who are willing to share their stocks for the value the brokers client commented. The NYSE is also a place where the current market value can be seen along with the fluctuations or rises every second or minutes.

Stocks are very good financial instruments depending on the purpose and financial plan the investor has in mind. It does not have a fixed value because of the markets condition. Some investors are into day trading, where they rapidly transact hundreds of stocks per day for the instant profits it brings. It is more of like a gamble and financial experts see the buy and hold strategy as the better way in investing.

These are just some of the basics that one needs to learn about stocks and stock trading. - 23218

About the Author:

Mara Hernandez-Capili is a writer and a researcher on Business and Finance. Learn more on how to increase your financial intelligence by learning about emini trading today. Start earning extra income by making your money work for you through the emini trading system. "Start your journey to financial freedom not tomorrow, not next week, but today."