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Beginners Guide To Stock Market

If you want to learn what stock market actually is, you have to know who have a right to participate in such trading activity in the first place. In other words, you have to know which subjects and institutions deserve to be called publicly traded companies. In short, publicly trading companies are all corporations that are listed under certain authority institutions and bodies; for example U.S Securities or Exchange Board. In the old times, people called these companies joint- stock institutions. So, if you want to learn the basic principles of the stock market trading, you will have to know certain things about these corporations.

This specific trading activity started during the great industrial revolution in Europe. This revolution was a big change that had an impact on completely industrial system. It will not be surprising if we say that this production change reflected on all aspects of society. New business circumstances needed a new approach, which is the reason why MPs in the British Parliament voted first joint-stock companies act.  This act was later introduced outside Britain, firstly in countries which belonged to the Commonwealth. Today, we have a real expansion of such companies and almost all countries around the world have their own joint-stock institutions. Some people like to say that the modern economy is unthinkable without stock market corporations. They are probably right.

When we are talking about company capital these days, we must understand the basic mechanism of the Initial Public Offering system or just IPO. In the first step, if some company wants to become a part of the stock market, its capital has to be raised by the mentioned IPO. After that, capital is “sharing” into smaller “units”. In most cases, the value of these shares is not very big, approximately between $10 and $100. This price is also known as “face value”. These values represent the actual capital of the company. More about this is explained here.

After that, the company is ready to participate on the market because all these shares are tradeable. This is a beginning of the stock market for every company these days.  This is also a moment when economic laws of demand and supply jump in the game. The price of the shares is no longer under the supervision of the IPO and other institutions. The current value is just a consequence of circumstances on the global market.

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