How Stock Market Works

Summary :- How Stock Market Works

provides information to those wanting to earn

cash flow, passive income and create wealth

for lifestyle using stock market strategies and

real estate.

Description :- How the stock market works

is a mystery that confuses many people and

unfortunately prevents them from investing in

the stock market. However many of us who

have money in any type of retirement or

managed fund account can count ourselves as

a participant in the stock market anyway. Have

you ever stopped to wonder how the stock

market works?

If you have ever attended an auction then

you might be able to relate to the daily

operation of the stock market. The stock

market is basically an auction between those

who believe that the stock is overpriced and

will drop (known as the bears) and those

who think the stock will go up and is

underpriced (known as the bulls)

At an auction, there is an auctioneer, the New

York Stock Exchange (the largest stock market

in the world where 85% of the world's finance

is exchanged), and the American Stock

Exchange is called the market maker. The

market maker tries to match buyers with

sellers so it is acting as the auctioneer.

There is no set stock price, so Institutions

and traders can bid for and offer to sell stock

at different prices and a balance between

these determines the final stock price as set

by the market maker. Stock Market prices

fluctuate throughout the day depending on

supply and demand.

Bidders buy on the expectation that the stock

price will go higher and sellers sell because

they think the stock price will go lower. The

stock market is a game of psychology

between the bulls and bears that repeats

itself daily.

There are many stock market indexes that

comprise groups of stocks within a certain

group or industry. These indexes rise and fall

depending on the stock prices of the

companies included in these indexes. The

most famous stock market index is the Dow

Jones which comprises the top 30 stocks in

the USA, there is also the S&P 500 that is

made up of 500 so called "blue chip" stocks.

The NAZDAQ operates completely differently

from the New York and American Stock

exchanges. The NAZDAQ operates

completely electronically. The trades placed

on the NAZDAQ are placed through a huge

computerized network. Buyers and sellers

place their bids and offer stocks through the

network.

The stocks in the system are put into

different levels depending on their bid or

ask price. The highest bid price gets the

top position for the purchasers and the

lowest sell price is the first to be sold for

the sellers. This is basically a

description of how the stock market bid

and ask system works when you see

different prices listed for a particular

stock.

To most stock market investors all this goes

on behind the scenes. The internet has

simplified access and the understanding

required into how the stock market works in

order to invest successfully. The number of

investors investing in the stock market online

has increased dramatically over the last

decade as people can easily get an online

stock trading course for beginners and have

a basic understanding of how the stock

market works.

This has allowed investors to not be reliant

on stock brokers charging high brokerage

commissions in exchange for their stock

market knowledge.

Small, educated, astute investors with a

good understanding of how the stock market

works through a good online stock trading

course can now invest with confidence in a

level playing field and create substantial

profits to grow their net wealth.

Author :- Dhanashri Academyprovide information to those wanting to

escape the rat race and earn passive income

and create wealth for lifestyle. It contains

information on How the Stock Market works

and different Stock Market Strategies to

generate cash flow from the stock market.