The Stock Exchange – for Beginners

What does it really mean to trade on a stock exchange? Many people still believe that investing is a privilege maintained only by those who have enough funds to make their money make more money for them. This is not the case. Investing on the stock exchanges is moving further and further away from this position and today, it is accessible to everybody. The goal of the stock exchange is to allow anyone to trade securities and other financial products.

Stock exchanges were created to allow companies to raise money from a large pool of investors and to provide a market for investors to later sell their shares in those companies. The purpose of this is that these companies use the money raised for development, thus increasing their net worth and creating profit for their investors. Due to the difficulty of obtaining the funds from other sources, such as banks, it has become common for companies to issue themselves to the stock market. This is known as Initial Public Offering (IPO), Trading stocks from the various companies who have obtained an IPO, is done through computerized trading platforms, In recent years it has become common for independent traders to use trading platforms in order to manage their own portfolios.

Ways to invest in stocks include banks and brokers. The two substantial differences in trading via banks compared to trading via brokers. as that of commissions and technology. In most cases, due to their need to maintain a larger staff component, the commissions for trading via banks are higher and can increase the costs of trading by up to 5 times more than through brokers.. Many brokers have state of the art trading platforms that are designed to help a private investor get the same advantages as an institutional trader. The majority of the banks have trading platforms that are outdated.