Basics to know before you enter the stock market

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Stock quote – A 串流報價will let you know the current value and deviations of a stock.

Arbitrage – There are different types of markets where you could buy and sell the same stocks of companies. However, there will be some deviations or differences in the prices of the same stocks in these markets. Arbitrage is the habit of buying and selling the same stocks in different markets to avoid losses at times.

Averaging down – Let us assume that you buy shares worth $100. However, due to weak market conditions, your share value drops down, and the total becomes $50. Now, you will be at a loss of $50. However, instead of waiting for the price to go high again or selling it with loss, you could consider averaging it down. It means that you have to buy some more shares at $50 to make your average spending on the stock lesser than your initial investment. Let us consider that you buy the same number of stocks at $50 again as you did initially. So, your average cost will become $75 instead of $100. So, your loss is reduced to $25.

Broker – Broker is the middleman working between the investor and the stock exchange. If he is not there, the investor would have to go to the national stock exchange and carry out all the necessary transactions and procedures for every trade he makes in the market. Since it will not be possible for such a large country, these middlemen came up. Brokerages could be the companies that act as middlemen. You would have to pay them a small fee every time they execute a trade for you. These brokers are available as mobile applications also.

Dividend – We are contributing to the public companies in the form of buying their shares. So, these companies are generating profits with our money. Hence, some of these companies would decide to provide a part of their profits for us as dividends every year. However, the number of companies that do not offer dividends is higher. It is better to invest in companies that offer this reward for their shareholders.

Stock exchange – The stock market could run only with a lot of procedures that should happen without any hassles. The companies should be listed, and their portfolios should be available for every investor. To manage all these activities and to maintain the proper flow of operations, there will be a stock exchange in every country where stocks are traded.

Initial Public Offering – Let us assume that a company is deciding to get listed in the stock market for the first time to raise money from the common people. So, they will go to the regulatory body of stocks in the nation and register themselves. On seeing the financials and operating procedures of the company, the body will approve its proposal to get listed. So, the company will issue its first set of shares into the market. It is known as the initial public offering.

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