Stock Market 101: A Beginner's Introduction
You may have seen the movies with people shouting at computer screens and into telephones as they work on the stock markets.
But have you ever wondered what they are actually doing?
It's okay to say "yes," and you're not alone! So let's start from the beginning.
Stocks are small parts of a company that people can buy and sell. They're also often called "shares." Owning a stock means you own a piece of that company.
If the company does well, then the value of your stock goes up and makes money, but if the company does badly, then your stock will lose value.
Many people buy stocks to try to make money by selling them for a profit if the company does well, but it can be risky.
Not all companies have stocks that people can buy. First, the company has to "go public" and make its stocks available for anyone to buy. Companies may also be privately owned so their stocks cannot be bought or sold.
What is a stock exchange?
A stock exchange is a place where stocks are bought and sold.
The people we've seen shouting in those movies work in the stock exchange. They are usually traders working for big banks or investment companies and they are trained to buy and sell stocks quickly to make money for their clients.
However, a lot of the buying and selling now takes place online, so the big stock exchanges in places like Wall Street in New York, or in Shanghai, Tokyo or London are often not quite like ones in the movies.
People called brokers buy stocks for their clients. And this can also be done online now using apps and online brokers, making it very easy to do — but still just as risky!
