What are Stocks???
A stock, also known as an equity, is a security that represents the ownership of a fraction of the issuing corporation.
Corporations issue stock to raise funds for their business, allowing investors to buy and sell the stock on exchanges, such as the NYSE or the Nasdaq. The stock exchange is a centralized location where stocks can be traded within a regulatory framework that’s designed to protect investors from fraudulent practices.
Units of stock are called shares, so when you trade stocks you will buy or sell a number of shares.
Some advantages of trading stocks are:
– Regulated market
– Thousands of stocks to choose from means more opportunity than other markets
– An individual stock can move many percentage points in a single day, which means there is huge profit potential
– Useful volume, market depth, and level 2 data
– Because the stocks are traded on a centralized exchange, the exchange is able to accurately provide this information
Some disadvantages of trading stocks are:
– Fixed trading hours. Although pre and after market trading is available, stocks move most during market open hours, which may not be a convenient time for everyone.
– Fewer funding firms for stocks compared with CFDs
Learn everything you need to know before signing up with Trade the Pool from our full Trade the Pool Review
