Consider the features of trading in the stock market. First of all, we will determine what it is. The so-called securities are traded on the stock market, which are the equivalent of the market value of the issuer (the company issuing the bonds). The history of the stock market is rooted in the Renaissance and the East India Company, which initiated the concept of stock (a security giving the right to own part of the company).
Trading stocks is conducted on the stock exchange (a company that provides the functioning of the securities market). Today, stock trading is also possible through over-the-counter alternative trading systems.
The main difference between the currency and stock markets is a different ideology what we buy. In the first case, we buy an instrument (money), and earn on the difference in rates today and tomorrow. As we have already said we earn on the needs of various foundations and international companies. In general, trading in the foreign exchange market is to find a mismatch between supply and demand for currency (cryptocurrency).
In the stock market we actually invest in the company, hoping that it will grow and bring us income not only in changing the price of the stock, but also by receiving dividends.
At the same time, the functionality of trading terminals is the same. You see the same charts and the same opportunities in terms of trading. In fact, you can trade in one terminal and on the stock and foreign exchange and cryptocurrency markets. Modern companies simply negotiate with different exchanges, acting as a dealing center.
What is traded on the stock exchange other than stocks. First of all, we’ll clarify the definition is a stock is a physically existing security, in fact an agreement between its owner and the issuing company. A share has two values the so-called face value (indicated on the form of the share) and the current market value. Market positioning for shares is a purchase (long position) and sale (the so-called short sale its peculiarity is that you borrow a share from a broker under the obligation to return it). The stock is the so-called underlying asset.
In addition to shares, so-called contracts for difference (contract for difference, abbreviation - CFD) are traded. They are derivatives. They do not imply a purchase sale of an underlying asset, but the crediting to the balance of the seller and the buyer of the difference between the value of the asset at the time of the transaction and at the time of its completion. If the transaction was successful and profitable for the buyer, then his account balance increases by the amount of profit, and the seller’s balance decreases accordingly and vice versa. Why such difficulties, if you can just buy a stock and then sell it? This is due to the stock circulation mechanism. On the stock exchange you can only buy a package of shares of the same name in a fixed amount (most often it is 100). And this amounts to from 100 to 100,000 USD in cash, depending on the market value of one share. For this reason, for the convenience of trading small speculators, trading with marginal leverage (usually in the range from 2 to 50) is used. It is called purchasing power. For example, having only 1,000 USD on your account with a brokerage company, you have the opportunity to buy shares in the amount of 50,000 USD. This imposes significant restrictions on trade, because there are stocks worth 1000 USD and to trade on them you will either have to increase the account balance or agree with the broker to increase the purchasing power for the existing deposit.
The financial result of the transaction is determined by the principle of how many cents the price difference multiplied by the number of shares (for example, the price went 100 cents in your direction, there was a package of 600 shares in the work, the transaction result 1.00 * 600 = 600 USD profit from the transaction) and written to the account balance. Profitable increases it, unprofitable reduces it.
When trading stocks and CFDs, you can always find a tool that exactly today can actively move (the number of shares traded is several thousand, unlike several dozen currency pairs). It is for this reason that stock markets attract so many traders. In addition, active trading is conducted (now we are considering the American stock exchanges) not around the clock, but only during the trading session.
This allows you not to worry that something will happen after hours and constantly monitor stocks. Modern instruments have recently replenished with ICO tokens, some of which have the property of stocks and, in general, can be traded as stocks. Their advantage is unregulated which allows any small team to issue their own tokens literally during the day.
Therefore, any team can raise money for their project without using the enslaving conditions of startup angels. Sometimes buying a token during an ICO can bring you tens of thousands of dollars.
The main disadvantage is the same unregulatedness. In this regard, frank SCAM projects are coming to IKO. No one can guarantee that tomorrow the team in which you invested will not go into the unknown with your money.
Be careful, invest only in those projects that do not hide their faces, already have achievements (and a better working system) and will not disappear immediately after collecting money.