Wall Street on Our Street
Stocks! What are they?
Before trading, let’s start with the Basics about Stocks!
Whether you are just starting to trade or an experienced trader you have heard of stocks. Tesla, Apple, Amazon… just to name a few, are the companies that are open to public to trade. Traders and investors can buy shares from these companies, sell these shares or keep these shares in their portfolio if they believe that they will be profitable in the long or short term. So, what are stock and what makes them the bedrock of trading?
What is a Stock?
A stock, a.k.a. equity, represents the ownership of a portion of a corporation. Stockholder’s profits and losses are equal to how many stocks they own. Stocks are mostly bought and sold on stock exchanges.
- Diversification: Traders can diversify their investments and balance their high risk investments with stable ones.
- Liquidity: Stocks have high liquidity and are easily tradable.
- Long-term Investments: Stocks are considered to be long-term investments. It is not unusual for a stock to drop 10% and get back up. This is why stocks are considered to be foundation of trading.