Investing in the Stock Market

A stock market, or mutual stock market is an online marketplace where stock shares of different companies are listed; these can include securities registered on a national stock exchange or a securities exchange located locally. The buying and selling of shares are done through a broker who works for the seller and buyer; usually a stockbroker has his own account and buys and sells stocks for both the buyer and the seller. A buyer usually purchases shares from the seller at a certain price and then resells them to another party. A buyer can either buy individual shares or in a group, as in a corporation.

There are two types of traders: institutional and retail. Those who buy shares in the stock market and sell them on an exchange are called institutional buyers; these are usually banks or insurance companies. On the other hand, retail traders are individuals or families who purchase shares for personal investments.

Investors buy shares in stock markets because of the profits that they can realize by trading in these stocks. The profit potential of the company is also important for investors who want to make money from their investments. Usually, the bigger a company is, the better its financial outlook is so investors choose companies with big names; this is because these names have the most potential in the stock market. As an investor, you should be careful to choose only those stocks that can give you high chances of making money through trading and should have high market value.