Share trading is also known as stock trading where one invests in the shares or stocks of public listed companies or organizations for a profit stemming from an increased share price or from a given dividend income. It used to be that share trading was done on a long-term basis as an investment but today, share trading sees more investors looking for short-term gain through an active buying and selling of shares.
Purpose of Shares
A trader must understand the basics of share trading; the very first is to understand the purpose or premise of share trading and the stock market. Shares are traded when a private company is positioned for growth but lack the funds. They need to take a loan or get some private funding from some source. Today, the company can offer shares of its organization to the public which makes any buyer a part owner of the company albeit a very small portion. This shares offering is implemented through an initial public offering or IPO to the public to purchase. The IPO’s opening price is based on what the company stock is perceived to be worth at the offering time. The company shares are traded over time by traders who expect the company to improve in its operations and head for better growth and performance.
Shares trading are happening in the stock market where the Internet has impacted the trading scene drastically to make it more global. There are many stock exchanges all over the world with the Internet expanding the accessibility to various trading platforms. One of the more prominent stock exchange houses is the New York SE. Another is the US Nasdaq.