How the stock market work?

 WHAT IS STOCK?



  • Companies need money to help them grow
  • They use it for all kinds of things, like buying materials to make their products, developing new products, building plants and hiring people to work
  •  To raise money, companies often split ownership of the companies into smaller "shares" that they sell to the public. The shares are also called 'stocks.


HOW IT WORKS?



  • A Stock Exchange is an institution which hosts a market where traders can buy and sell stocks.

  • Traders make money by buying the stock before the price goes up, and then they sell it before it goes back down.

  • The price of the stock reflects the available information about the financial health of the company.

  • Traders watch the stock rise and fall and make decisions to make a profit.



HOW TRADERS MAKE MONEY?



  • If you sold your stock on a day when the price of that stock is higher than the price you paid for it, you would make money



HOW TRADERS LOSE MONEY?


If you sold your stock on a day when the price of that stock falls below the price you paid for it, you would lose money.



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