Stock market investing is exciting and challenging for many people. The opportunity to earn attractive financial returns lures beginner investors. Although stock market investing is a wise investment choice for many people, it is important for beginners to understand the basics of the stock market. Information regarding the stock market includes the major stock exchanges, how to buy and sell stocks and stock market regulations. Investors who fail to understand the stock market face the possibility of losing money by making uninformed investment decisions.
Stocks are valued, bought and sold on the stock market. The stock market is comprised of various stock exchanges. The primary stock exchanges include the New York Stock Exchange, the NASDAQ and the American Stock Exchange. Stocks of some smaller companies are traded on regional stock exchanges, which include the Boston, Chicago and Philadelphia Stock Exchanges. Shares of stock are exchanged on the stock market from the second the market opens until it closes for the day.
Stock Market Tables
Stock market tables provide valuable information to investors about a particular stock. Beginners should understand how to read stock market tables. The first and second columns of a stock market table show the highest and lowest paid prices for the stock in a 52-week period. The third column gives the stock symbol. You can often find information about a stock on financial websites by entering the stock symbol. The fourth column shows the annual dividend. Not all stocks pay dividends. Columns five, six and seven show the stock’s yield percentage, the price-to-earnings ratio and the volume of shares traded. Cash dividends divided by the closing price of the stock equal the yield percentage. The price-to-earnings ratio is a performance indicator. Columns eight through 11 list the lows, highs, closing price and change in price from the previous day.
Buying and Selling
Buying and selling shares of a stock usually happen through stock brokers. Two primary types of brokers exist – full-service brokers and discount brokers. A full-service broker usually offers investment advice concerning buying and selling stocks. A discount broker simply performs the transactions you desire to make. Many discount brokers allow you to handle all transactions online through your account setup on the broker's website. Usually a broker requires you to establish an account with them and make a minimum deposit into your account. The features of brokers vary, and beginner investors must thoroughly research companies before choosing a firm to handle their market transactions.
The United States Securities and Exchange Committee regulates the stock market in the United States. The SEC seeks to protect the well-being of investors by providing basic facts about companies. Firms desiring to issue stocks must meet the requirements of the SEC and disclose vital financial information to the public. The SEC seeks to make the stock market transparent so that investors can make informed investment decisions. In addition to stock exchanges, the SEC oversees licensed financial brokers, mutual funds and investment advisors. Companies, stock exchanges and brokers who fail to follow the rules of the SEC may have their stock market privileges revoked.
- North Dakota State University: Understanding Stocks and the Stock Market
- Yahoo Finance: How Stock Markets Work
- U.S. SEC: How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation
- New York Stock Exchange: How to Read Stock Tables
- Missouri Secretary of State: How to Choose a Stock Broker
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