Stock Market Investing for Beginners

Stock is a term that refers to the capital that a company raises by issuing shares. When you buy shares, you are giving the capital (the "stock") to the company that it can use to fund its operations. So the company can use the money raised by issuing shares of stock to hire employees, fund marketing and advertising efforts, build new manufacturing plants, or any other activity that the company needs funds to carry out.  

The "stock" of the company is divided up into individual shares. So a company could start with a "stock" of a million dollars, and divide that up into 10,000 "shares of stock" that it could then sell to the public for $100 a share. When you buy a share, you own a "share" of the company. Of course, to own 25% of a company worth $1 million, you would have to buy $250,000 worth of shares, or 2,500 shares.  

Like anything else, once you've bought something you have a right to sell it. The cumbersome way to deal with this would be to sell it back to the company, who could then find another buyer. However, as soon as the concept of stock in a company was devised, people developed markets for secondary trading of shares of stock. So rather than going through the company, and having the company deal with the problem of finding new investors, people could trade stocks back and forth amongst themselves. This was the birth of the first stock markets.  

This created a situation where the value of the shares, and therefore of the company itself, would change with time. As the company became seen as more valuable, perhaps because it was making more profits, people would bid up the prices of shares sold in the stock markets. More people would be interested in buying an ownership stake in a successful business, and many of them would be willing to pay more money to own shares of the stock.  

At the same time, companies that were not doing well would become less valuable. If a company was losing money or simply not operating at a very profitable level, fewer people would be interested in owning stock in the company. Those that did who wanted to get out of their ownership stake would lower the prices they are willing to accept to get rid of their stock. As a result, the price of the shares of a company having problems will drop in value.  

This guidebook has taken some time to talk about options trading and all the neat things that you can do with it. We talked a bit about what options are and some of the benefits of choosing to work with them instead of with some of the other investments out there. Also, this guidebook moved onto some of the best overall strategies that you can use with options trading and what kind of market scenarios you encounter when using some of them.  

This book includes:

   Types Of Financial Markets

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