Did you ever hear a story about Joseph Kennedy? He was a semi-wealthy investment banker on Wall Street, who was walking to work one day and decided to stop by the shoe-shining boy on the curb of the place where he worked. While he watched his shoes being polished to the sparkling black glow, he heard the boy comment on the stock market crash happening at any time. Kennedy was rather startled – if a simple shoe-shining boy could own a stock, then it must have meant that it’s time to get rid of it. Luckily for Kennedy – not so luckily for the rest of modern America – that day is known in history as “Black Thursday”.
On this day in 1929, Wall Street has suffered its largest, deepest crash that created devastation which led to the greatest economic crisis of all time. Subsequently to these events, the overall gross income of the entire nation dipped by 50%, while the unemployment rate rose to 25%, marking it the biggest one in US history.
Unlike the stiff 1920s, anyone can own stocks today. This is the basis of the appeal when it comes to stock trading – no matter who you are or where you’re from, with a little money and a stable Wi-Fi connection, you are able to come a long way with investing in the stock market.
The market is more accessible and diverse, accepting and welcoming both trading pros and first-timers, making it easier for traders from all around the globe to even set up their own brokerage in few simple steps.
Most new investors think of stock trading as a short-term investment instrument for their biggest trading dreams. And though this is true to an extent – there are many new ways to implement strategies and make the stock trading a long-standing and successful tradition. And while you cannot exactly predict where the stock will go next, there are some indicators that can teach you the nature of stock market trading.
What is a stock, anyway? A stock represents a share in the company’s assets and earnings. When a company decides to go public, it will list its IPO (Initial Public Offering) and will allow anyone on the market to buy or sell stocks in its possession. Since it represents a part of the ownership, by owning a stock you can have a say in the matter of the company (voting rights) or rather earn steady dividends from the company’s profit. This way, simply by investing in a certain stock, you can have that investment pay off over and over again through these dividends.
Stocks can be sold and bought on stock exchanges, which need to be conformed to strict government regulations. Like any other industry, for the stock trading to function properly, rules and boundaries need to be set not only for the state’s protection but for your own as well. This way, through universal laws and policies your rights and your funds are protected from fraud and other criminal activities.
How is stock issuing beneficial for the companies? Well, through stock exchange each company aims to raise funds for its business to go smoothly. When a stockholder buys a share in the company, as that company progresses, so does the dividend for that shareholder. It’s a win-win situation for both sides. However, it should be noted that stockholders do not actually own corporations.
For example, if the company gets closed down, the shareholders don’t get to claim chairs, tables and other physical assets of the company to get paid out their cut. Rather, they sell their ownership in the stocks accordingly to their current value on the market. This way, your personal assets are never at risk no matter the difficulties a certain company may be going through. Of course, you can hold onto the shares even after the fact, this is your personal decision that doesn’t affect anyone else but yourself.
There are two ways for companies to gain additional funds. Either through borrowing money from the bank or another individual or through issuing stocks. While borrowing, otherwise known as debt financing, comes with interest, it generally creates more harm than good in the long run. With equity financing, on the other hand, each company grows by adding new members as shareholders. By sharing the load, they share the satisfaction of making a profit, thus driving more business as time passes.
The FXVC platform makes it easier than ever for traders to indulge in the excitement of stock trading. While this type of trading can seem intimidating, FXVC aims to educate you through many professional tools in order to make the job easier and more enjoyable than before. An appealing trading platform is created to be user-friendly and approachable, while constantly assuring traders that they can gain easy access to the results of the market performance.
When issuing shares, there are a few things to consider before making the leap. On one hand, issuing a bigger number of shares will naturally decrease their value. But it will also drive a bigger number of investors. Similarly, one person can decide on buying multiple or the majority of shares available and by becoming a majority shareholder, have a lot more say in the company itself.
On the other hand, when it comes to dividends, they don’t necessarily mean you will receive a regular dose of the bounty from the company each month. This usually only refers to the longest-standing companies such as Apple or Google. Most new companies, however, issue something which can be referred to as “growth stocks” – meaning, the company will reinvest those dividends instead of paying them back to you. This can drive a significant amount of profit in the long run, so stock trading usually requires a lot of patience.
To buy or sell stocks you will need a broker – a licensed professional to guide you through it all and do all the heavy lifting. For their hard work, you will have to pay them commission, but that’s natural like in any other business exchange. Brokers can be present on the trading floor or do the exchanges electronically or over the phone. Some exchanges also seem like auctions, where there is an additional level of excitement at play. The most common example of this type is the New York Stock Exchange. The NASDAQ, on the other hand, is an electronic stock exchange.
When it comes to online stock trading, the same basic principles apply – you will still need a broker who you will instruct what to do electronically, and you will use real money, of course. In addition, you will be able to request your trades on your own and have the ability to contact live brokers or reach other types of assistance at FXVC.
In the crowd of companies offering to do all these things for you, how do you know which one is the most suitable for you? Though each one has its perks, FXVC aims to acquire all of the best features by putting them neatly into one package set for the win. Based on how much money you want to invest or how often you want to make your trades, there are different types of strategies and approaches you can take. That’s why establishing a strong confident relationship with your broker is a crucial part of stock trading.
Stock exchanges are set up in a way that you can see everything unravel in front of your eyes. Since things are concentrated in a small space, following the fluctuating prices can be easier than with other types of trading. Not only that – the FXVC platform allows you to follow the latest news and developments all over the world. How is this beneficial? Well, when you track the latest geopolitical events, you can easily detect how will the company perform based on the facts you have and try to decide on your further trading step. In addition, all publicly traded companies are obligated to issue their quarterly earnings reports, which is another helpful tool in your trading journey.
Many companies often go through mergers or acquisitions, and this can significantly affect your stocks, too. For example, the more shares you own, the bigger the voting power. This way you can affect the decision that the board of directors makes. So, when one company buys another one, it buys their stocks as well, shifting their power center and your position, too.
In the end, stock trading is as exciting and alluring as any other type of trading. With its quirks and distinctive features, every trader can be drawn with a unique approach to the market. Whatever your trading goals may be, stock trading is sure to take you on a rollercoaster of emotions as you watch the market perform and affect your investments. With FXVC, this process is made more enjoyable and beneficial. Brokers are available to offer their help and assistance at any time, and no question is too difficult or complicated to address.