Investing in stocks is a popular way to grow wealth over time. A rising stock market is a good sign for the economy, while a falling one indicates trouble. There are many reasons a stock might gain or lose value, from a company’s financial health to new management, product recalls and even global events.
A stock market is a trading hub that allows anyone to buy or sell fractional ownership in publicly traded companies. Shares represent ownership of a business; if you own shares, you get to vote on company decisions and receive dividend payments when profits are distributed. The markets are run on computers that match investors who want to buy shares with sellers looking to turn their shares into cash. The exchanges are regulated to ensure fair prices for both buyers and sellers.
Investors in the stock market include retail (individuals) traders, institutional investors (pensions, mutual funds, exchange-traded funds, insurance companies, hedge funds and banks) and private equity firms. Robo-advisors, which automatically manage investment accounts for individuals, also participate in the markets. The market includes multiple exchanges that host actual trading, and indexes that measure the values of individual stocks.
The most common way to participate in the stock market is by buying and selling shares of a company through an exchange. You can do this through a brokerage firm, which will charge fees for each trade and provide research reports. There are also many virtual trading platforms that allow you to practice your skills without risking money.
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