Stock market trading and stock market basics are rarely a topic people talk about. When you start talking to people regarding this topic, chances are you will either get a really confused look or somebody who utters a few words and nothing more. The latter is the kind of person who will ride along, ashamed to admit that he/she knows nothing about the stock market. You, on the other hand, feel so smart that you know what the NASDAQ really is, or you know stock market basics.

Let’s learn the stock market basics in terms that common people can understand. Stock market is also known as the equity market. It is where shares in companies are traded or bought by other companies, or by really rich individuals. For short, it is where people go to buy or sell shares of stocks, this is stock market trading. A specific example; Person B has invented something and wants to sell it worldwide, but before he can do so, he needs to build a machine that can produce a thousand of his inventions per minute, a marketing strategy, a group of intellectuals to help and assist him among all other things. We all know money makes the world go round, same goes with B, he needs a million dollars to carry his dreams out. So he decides to sell shares or stocks to make some cash. He was able to have ten investors who invested $100,000 each. A corporation is now born. His invention became a huge hit so after a year, they would divide the profits among the ten investors who we can also call the shareholders.  This is basically how it is in the stock market trading, except that it deals with bigger figures and bigger companies or corporations.

To learn stock market, you need to understand that like with everything else, the stock market also has its bad days called the bear market and the good days, the bull market; hence, The Charging Bull on Wall Street. Although technically, a bear market would be when prices of key shares plummet by 20% within at least two months while the bull market is when shares are expected to, or is actually rising.

One that has always been compared to the stock market trading and exchange is the bond market. Similar to the stock market trading, companies come to the bond market when they need investors to shell out money. The difference is that, the bond market is also a debt market and the government can also be found here issuing bonds or notes. Investors come here to loan their money not without interest and a maturity date of course. This is why bonds are also known as fixed-income securities, because you know when and exactly how much you will get back. The comparison between the stock exchange and the bond market is the certainty or the security of your investment and the increase on the investment fund itself. With the bond market, you have the promise that you will receive the amount you invested, plus the interest; unless of course, the issuer suddenly disappears. But the less risk, the less increase in the investment. While in the stock market, you can lose your investment when the shares of the company you invested on falls or fails but with a greater chance for increase in equity when you invested right. Well, that is the stock market basics. There are still a lot to know to learn stock market as a whole.