When we were younger, watching movies, dramas, listening to the radio; we hear the words: investment, trading, stocks, warrants. Some of you might know (smart lah) , but for those of you who do not .. Well, we’re here to help.
The act of buying and selling an equity (shares) in the secondary market.
reader: if i need definition, i google lah.
We’re getting to it.
Basically, stocks/shares can be purchased through financial institutions or better known as brokerage firms. Individuals who wish to trade are required to open a Central Depository System (CDS) account, which will then enable the individual to place an order through the traditional phone method or the online method.
With your account up and running, you can now trade!
Dancing DiCaprio in Wolf of Wall Street
How does it work though?
Upon a company’s Initial Public Offering (IPO) the stock will enter in to the secondary market, which is where you’ll be able to buy and sell shares.
Initial Public Offering (IPO)
Initial public offering is the process by which a private company can go public by sale of its stocks to general public. It could be a new, young company or an old company which decides to be listed on an exchange and hence goes public.
The IPO subsequently moves to the secondary market
This is where Share Trading comes in, where investors are able to trade the shares of the listed company. Investors will look at the share price for the market value as a guidance.
In the market, share prices will fluctuate depending on the aggregate demand (buyers) and supply (sellers) of the shares.
Note: prices could also be affected by other factors (i.e.: corporate actions)
To simply put it, companies with shares listed constantly improves the business acumen and credibility. This will in turn increase the demand (and vice versa) of the stock resulting from an improvement in business.
To very (very very) simply put it
Business improve , Buyer’s trust increase
Buyers demand increase , share price increase.
Well that’s the gist of it, basically to understand the market better one should look into further learning more about trading. Whether it is technical or fundamental analysis, reading the news, attending courses. A smart investor, is a great investor. After all there’s ‘earn’ in Learn.