The stock exchange or stock market, a market that collects, issues, and trades shares, bonds and other securities, allowing companies to support their capital by giving investors part of their ownership.
The stock exchange is defined as the markets that include the presence of exchanges of securities within a specific region or country, and depends on the existence of a value or price of the shares traded in it.
Another definition of the stock exchange is that it is the activity that depends on buying and selling shares within a specific general level for their prices on each day.
Work is implemented in the stock exchange (securities) by dividing its market into two types; They are the main market and the secondary market. The main market sells new securities for the first time by applying a set of subscription offers, and founders often get most of the securities from investors, while in the secondary market all subsequent operations of trading are carried out, and many investors participate in this market; Either by individuals or institutions.
The stock exchange usually works to achieve private trading in stock companies through a group of exchanges that bring together sellers and buyers; The traded shares are included within the deals for trading, and it is possible to work on their implementation in an electronic way, and it includes the presence of two operations: buying and selling shares and all securities.
Buying securities (shares) whose prices rise or fall, and this is one of the encouraging reasons for many investors to buy a group of them in most professional sectors, and this thing is called diversification, and often the goal of buying diversified shares is to get money by dealing with shares Companies that are expected to make good profits, which leads to an increase in the price of their shares.
The sale of securities (shares) is a transaction between the seller and the buyer; When the share price drops, sellers seek to sell it, and buyers are willing to buy it, and often every buyer starts buying the offered shares when it reaches a specific point of the price.
Investing in the stock market offers a range of benefits to individuals and establishments, and these benefits are summarized according to the following points:
Benefit from the growth of the economy and the profits of establishments: because growth in the economic sector contributes to the production of income, which leads to an increase in demand for products, and this results in a rise in the value of private cash revenues in companies.
Ease of purchase: Any investor can buy securities and shares in an easy way through the presence of a broker or financial analyst, or by relying on the Internet.
Obtaining money, which is carried out through the application of two methods: buying securities at low prices, and then selling them at high prices.
Many investors prefer to get money by buying shares of companies that offer them financial profits; Because it achieves moderate growth. Ease of selling: that is, if the investor needs to get money, it is possible to sell some of his shares at any time, but as a result of the volatility of stock prices, the risk of incurring a loss may appear due to this sale.
Investing in the stock market sometimes leads to the emergence of a set of negatives, the following information about them:
Loss of the entire investment: it is possible for the investor to lose his entire investment if the company loses and its share prices fall, and the rest of the investors decide to sell their shares, which leads to the loss of all the initial investment for each investor, and this results in the loss of all money in the savings or inventory field.
The need for a lot of time: that is, investing in the stock exchange takes a long time in order to choose between facilities, and determine the extent to which each of them can achieve profits; By following up on annual reports, financial statements and special developments in companies, in order to obtain the best investment price to participate in the stock market.
The emergence of fluctuations in stock prices: The stock market faces a noticeable discrepancy in the prices of shares and all other securities, which leads to influencing the decisions of individuals in buying and selling.
The emergence of competition: New investors face competition with professional investors and traders, or those with experience who have the time to invest, unlike individual investors who need to know how to gain this advantage.
Stock exchange terms
The success of the stock market in the investment process depends on it being characterized by a set of conditions, the most important of which are:
Size: one of the necessary conditions for the stock exchange; As it contains many companies, this contributes to increasing the total value of the shares traded in it, and helps investors to diversify their risk, and not focus on a limited number of securities.
Liquidity: The possibility of obtaining money through securities, and when the size of the stock market is large, the percentage of liquidity in the market is high.
Transparency: The ability of the stock market to continuously provide appropriate information about the companies within it and all movements that include buying and selling to investors, and this leads to reducing manipulation of financial information, or a group of investors obtaining financial data before others.
Stability: The ability of the stock market not to be affected by sharp price fluctuations as a result of irrational expectations, and the impact of rumors on stock prices, which leads to their rise or fall, and as a result, the prices of securities are away from their true value.