A lot of discussion goes on about the stock market on a daily basis all around the world. It is an important part of the economy of a country, and a major source of investments.

What is a Stock Market/Share Market?

Stock Market, also known as Share Market or Stock Exchange, is the marketplace for the buyers and sellers of stocks or shares of listed companies of a country. A stock or a share represents the ownership of a company issuing such stocks. Companies issue stocks to raise capital.

Investors or traders of the share market can bid for these stocks via a stockbroker or a personal trading platform. The stock prices largely depend on the demand and supply of the said stock, also considering market conditions, company performance etc.

As of 2018, there are 60 stock exchanges in the world. Combined, these exchanges have approximately USD 68 trillion market capitalization as of December 2018. Market Capitalization is the market value of all the stocks traded within a market.

How to Engage in the Stock Market?

There are two main ways an investor can interact with the stock market. Depending on the person, they can either opt for investing or trading in the market.

Investing in the share market is a more long-term endeavor. In this the investor puts money into a certain stock or portfolio of stocks and retains them for a year or longer. The main purpose of this investment is the expected dividend return paid annually or quarterly. In the long term, the investor can even look to profit from gains in share prices when he sells the stocks.

Trading in the share market is where the investor looks to cash-out quick. These traders look to returns from buying and selling: buying at a lower rate and selling at a higher rate. However, this can be tricky, since the stock market prices fluctuate depending on demand and supply for stocks.

Bull Market vs Bear Market

These terminology are commonly used in stock market interactions to describe the nature of the market. The association of animal names have been derived from the way each of these animals attack.

A bull uses its horns to attack its target in an upward fashion. Hence, a Bull market is known to be a market on the rise. A bear stands up and uses its claws to attack down on its target. Hence, a Bear market stands to resemble a market with prices going down.

What is a Stock Portfolio?

A stock portfolio is a collection of stocks from different companies. Whether you are a long-term investor looking for dividends or a short-term investor looking for trade-wins, it is important to have a stock portfolio. The main objective of the stock portfolio is to minimize your risk. The stock market is ‘unpredictable’ by nature. So by having a variety of stocks from a variety of companies an investor can minimize his losses, if any, against the wins of the other stocks.