A stock market can also be called Equity market or Share market. It is a market where shares of publicly and privately held companies are traded and may not necessarily be a physical facility. Many Stock markets exists around the world as most countries have their own stock market and in 2012 the size of the world stock market was about US $55 Trillion. The Stock exchange is a place or physical facility where stock brokers can buy or sell shares. In Nigeria the stock exchange is called the Nigerian Stock Exchange (NSE).

A company’s shares can be traded on more than one stock exchange as long as it meets the listing requirements for the various exchanges and this is called Dual listing in the case of listing on two exchanges and Cross/Multi-listing in a case where more than two exchanges are involved. Companies may do this to create more liquidity for their share, create visibility for the organization and increase their ability to raise funds.

Listed companies are generally seen as having better corporate governance as the listing requirements are quite thorough and require lots of information disclosure. The size of a company is measured by its market capitalization at that date. Market capitalization of a company is simply the current price of its shares being traded multiplied by the number of shares listed.

The major actors in a stock market are the Issuers, the Investors and the Intermediaries. The Issuers are the companies selling their shares and are mostly established firms with a decent track record. The Investors are the individuals or firms (Mutual funds, investment and finance houses etc) willing or ready to buy shares available for sale. The intermediaries are the brokers and advisers who connect both the parties to make a sale happen.
Owning a share of stock of a company automatically makes you a co-owner of the firm and every share is a unit of the company. As a co-owner you are entitled to be involved in the decision making of your company and also entitled to returns on your investment in the form of dividends on profits.

Money can be made from the stock market in two ways; buying and selling shares and buying shares to earn a dividend. In making money through trading in shares the investor focusses on capital appreciation of his stocks. For example he buys company XZ shares at N2 and 6 months later the price is N5 he has earned a capital appreciation on his shares of N3 if he sells as at that date. He could also earn a dividend of say N0.2 on his shares for the current year if he decides not to sell which is a decent return of 10% on his initial investment of N2 and may continue to earn even better dividend as the firm grows in subsequent years.

The Stock market is not only a place where lots of money can be made but also where a lot of money can be lost or thrown away. It is classified as a high risk environment because of the huge possibility of losses. You lose money by selling your shares at a price lower than that which you bought or if the company goes bankrupt implying that its shares becomes worthless.

Despite its risky nature the stock market is a place where lots of people make a lot of money from consistently and like any other market, there are rules which can help one profit from the market. These include;

– Understand the business of the Stock you are buying: Its important for you to understand the business you are investing in as this will help you in forecasting its growth potential, risks and enable you respond appropriately whenever the need arises. Never invests in a business you don’t understand how it makes its money as government policies or macro-economic challenges can easily determine the future of that company.

– Do your Research: Choosing a good stock to buy requires detailed and painstaking research of the target company. Good research enables you take informed decisions. The audited and interim financial statements of a company contains a lot of information that can be used in determining if a company is a worthwhile investment and the fair price for the shares. This will increase your probability of making a profit while also limiting your downside potentials. You can always make use of the services of professional financial advisers or good brokerage firms if you not understand financial statements.

– Always test the waters: Even after crunching the numbers for a company you understand so well it is never advisable to jump in with both feet as you are better off testing the water with one foot before putting in the second foot. This gives you room to reduce your losses in the event of unforeseen headwinds. For example you had N 10000 to invest and you initially bought 500 shares at N10 each and suddenly the price crashes to about N 5 per share. You have an opportunity to reduce your losses by averaging down on your initial purchase price if you now buy 1000 shares of N 5 for N 5000. This will bring your average purchase price to N 6.66 for 1500 shares meaning that you would be making a profit when the price gets increases past N6.66.

– Avoid herd mentality: Avoid the tendency of looking for hot stocks that everyone is buying to invest in. Successful investors do not follow the crowd but rather most times do the opposite. They sell when everybody is buying knowing that the stock has become overpriced and buy when everyone else is selling knowing it has become undervalued.

– Have a Disciplined approach: The stock market is very volatile and rises up and down but a disciplined approach would allow one not to panic as every down turn presents a buying opportunity.

– Have a diverse portfolio: Do not put all your money in one stock or one sector but spread your investment across a number of good stocks in different sectors. This will ensure that losses in a particular sector will be offset by gains in another sector.

– Do not be emotional: The stock market is driven by two emotions (fear and greed) and any investor who can put these emotions under check will end up being successful. Be ready to cut your losses and move on quickly if the need arises and lock in your gains where necessary.

– Monitor Closely: Monitor your investments with eagle eyes as it takes a few seconds to make or lose money on in the stock market. You must have access to information on every company you have invested in.

In summary, no one knows what the stock market will do and following these rules will only help limit your losses while also increasing your probability for capital appreciation. So you should never invest all your money in the market.

Awesome

freshinsightng:
A stock market can also be called Equity market or Share market. It is a market where shares of publicly and privately held companies are traded and may not necessarily be a physical facility. Many Stock markets exists around the world as most countries have their own stock market and in 2012 the size of the world stock market was about US $55 Trillion. The Stock exchange is a place or physical facility where stock brokers can buy or sell shares. In Nigeria the stock exchange is called the Nigerian Stock Exchange (NSE).

A company’s shares can be traded on more than one stock exchange as long as it meets the listing requirements for the various exchanges and this is called Dual listing in the case of listing on two exchanges and Cross/Multi-listing in a case where more than two exchanges are involved. Companies may do this to create more liquidity for their share, create visibility for the organization and increase their ability to raise funds.

Listed companies are generally seen as having better corporate governance as the listing requirements are quite thorough and require lots of information disclosure. The size of a company is measured by its market capitalization at that date. Market capitalization of a company is simply the current price of its shares being traded multiplied by the number of shares listed.

The major actors in a stock market are the Issuers, the Investors and the Intermediaries. The Issuers are the companies selling their shares and are mostly established firms with a decent track record. The Investors are the individuals or firms (Mutual funds, investment and finance houses etc) willing or ready to buy shares available for sale. The intermediaries are the brokers and advisers who connect both the parties to make a sale happen.
Owning a share of stock of a company automatically makes you a co-owner of the firm and every share is a unit of the company. As a co-owner you are entitled to be involved in the decision making of your company and also entitled to returns on your investment in the form of dividends on profits.

Money can be made from the stock market in two ways; buying and selling shares and buying shares to earn a dividend. In making money through trading in shares the investor focusses on capital appreciation of his stocks. For example he buys company XZ shares at N2 and 6 months later the price is N5 he has earned a capital appreciation on his shares of N3 if he sells as at that date. He could also earn a dividend of say N0.2 on his shares for the current year if he decides not to sell which is a decent return of 10% on his initial investment of N2 and may continue to earn even better dividend as the firm grows in subsequent years.

The Stock market is not only a place where lots of money can be made but also where a lot of money can be lost or thrown away. It is classified as a high risk environment because of the huge possibility of losses. You lose money by selling your shares at a price lower than that which you bought or if the company goes bankrupt implying that its shares becomes worthless.

Despite its risky nature the stock market is a place where lots of people make a lot of money from consistently and like any other market, there are rules which can help one profit from the market. These include;

– Understand the business of the Stock you are buying: Its important for you to understand the business you are investing in as this will help you in forecasting its growth potential, risks and enable you respond appropriately whenever the need arises. Never invests in a business you don’t understand how it makes its money as government policies or macro-economic challenges can easily determine the future of that company.

– Do your Research: Choosing a good stock to buy requires detailed and painstaking research of the target company. Good research enables you take informed decisions. The audited and interim financial statements of a company contains a lot of information that can be used in determining if a company is a worthwhile investment and the fair price for the shares. This will increase your probability of making a profit while also limiting your downside potentials. You can always make use of the services of professional financial advisers or good brokerage firms if you not understand financial statements.

– Always test the waters: Even after crunching the numbers for a company you understand so well it is never advisable to jump in with both feet as you are better off testing the water with one foot before putting in the second foot. This gives you room to reduce your losses in the event of unforeseen headwinds. For example you had N 10000 to invest and you initially bought 500 shares at N10 each and suddenly the price crashes to about N 5 per share. You have an opportunity to reduce your losses by averaging down on your initial purchase price if you now buy 1000 shares of N 5 for N 5000. This will bring your average purchase price to N 6.66 for 1500 shares meaning that you would be making a profit when the price gets increases past N6.66.

– Avoid herd mentality: Avoid the tendency of looking for hot stocks that everyone is buying to invest in. Successful investors do not follow the crowd but rather most times do the opposite. They sell when everybody is buying knowing that the stock has become overpriced and buy when everyone else is selling knowing it has become undervalued.

– Have a Disciplined approach: The stock market is very volatile and rises up and down but a disciplined approach would allow one not to panic as every down turn presents a buying opportunity.

– Have a diverse portfolio: Do not put all your money in one stock or one sector but spread your investment across a number of good stocks in different sectors. This will ensure that losses in a particular sector will be offset by gains in another sector.

– Do not be emotional: The stock market is driven by two emotions (fear and greed) and any investor who can put these emotions under check will end up being successful. Be ready to cut your losses and move on quickly if the need arises and lock in your gains where necessary.

– Monitor Closely: Monitor your investments with eagle eyes as it takes a few seconds to make or lose money on in the stock market. You must have access to information on every company you have invested in.

In summary, no one knows what the stock market will do and following these rules will only help limit your losses while also increasing your probability for capital appreciation. So you should never invest all your money in the market.


Source: http://www.financialslot.com/2017/01/12/9-ways-to-profit-from-the-stock-market/

This is great information. Any ideas how I can contact a broker?