how does the stock market actually work?

Question

i mean, how can you tell if you make money or not? and what's up with all the negative and plus signs?

Answer 1

A company's ownership is made up of shares - let's say 1000 shares for 100% of the company. They need money to expand, so they sell 200 of these shares to people. They do this on the open market, so the question becomes, how much are people willing to pay for those shares.

Say people are willing to pay $50 per share, and one of the people who buys shares is named Gus. Gus bought 1 share, and we'll come back to him in a second.

So 200 x $50 = $10000 goes back to the company to fund operations. Those 200 shares are now traded on the stock market between owners. Gus owns 1 share, which gives him a 0.1% of ownership in the company, plus little perks like dividends and voting rights. If people think that the company will do well, they will be willing to pay more than the $50 Gus paid for his share, so the stock price goes up. The stock price would continue to go up until it reaches a point where everyone who wants to own shares either already does, or is unwilling to pay the new price.

Say Gus paid $50 for his share. The company is doing well, so Phil and Bob want to buy shares too - but they're all owned already. Phil is willing to pay up to $52 for Gus's share, and Bob is willing to pay up to $57 for Gus share. The price starts to rise because Phil and Bob want shares, but no one is selling. By the time the market prices it at $55, Phil is no longer willing to buy at that price, but Gus has better things to do with his money, so he sells his share, in this case, to Bob. Gus made $5, and Bob got the share he wanted for $2 less than he was willing to pay.

Cycles like this continue until demand is met, then the price begins to decline (leading the opposite as above to happen). And so on.

The + and - signs on a stock ticker show the momentary price change for each stock that was just traded compared to the price at the beginning of the day.

Answer 2

People trading things all over the World. Take for example, The World Trade Center was a place where they traded stuff all day all 5 pm. Same as the Stock Market if things go down or up the money will also.

Answer 3

Buy one share of widget stock for $2. Two weeks later, the company's greed or need has that same one share of widget stock for $20. Hey: someone's buying up widget stock for $20 a share. You turn in your stock to this buyer and earn $20 dollars.

Congrats: you just earned $18 in profit. OOps....got ahead of myself, you gotta pay the broker who handled your sale $3 in "transaction fees", but hey: you still earn $15. Good for you!!!

Those negative/plus signs and other abbreviated jibberish are terms understood by a trained stockbroker as to what his client's particular stock is doing and gives indicators when it's a good time to buy or sell shares of stock.

It boils down to how much you paid for stock shares against how much A SHARE some guy wants to PAY YOU for it.

Answer 4

Hi, i know what your question means. i also think stock market is a nice place for investing.

I found some useful tips in stock trading. It includes stock basics, how to protect your profit, find a potential increase share, control and manage stock risk, when to sell/buy stock and so on.

http://www.bernanke.cn/stock-trade/

Best Wishes && Good Luck!

Answer 5

(+) means more buyers than sellers for particular stock
(-) means more sellers than buyers for that stock in given day
when people believe the company have reasonable return of the near future, like the company bring more customer, design new product,good CEO, good relationship with customer, people will buy the stock
Opposite happen when people believe the company getting the sign, they bring new CEO without experience, bad product poor, customer relation, people starting to sell. That how the market work

You need to learn how to invest the right way so that you will see a bit ahead of everyone else.
Yes you could learn invest by yourself. it is your money, you should know how to do with it. for starter check this site out.

http://www.pathtoinvesting.org/index_fla...
http://www.stockcharts.com
http://www.streettalklive.com>... university. a lot amount of information. It will serve you well
I accumulate in good amount in 401k at the young age.I could share with you. when consider invest in stock market. you should consider basic 3 things:

fundamental analysis==(economic data,finincial health, management, business model, competetion)>>what to buy

technical analysis==(chart+indicator)>> when to buy

Sentiment/schycho analysis==>>mood of investor, Contrarian point of view.
Market cycle===>> check out book Trader Almanac by jeff hirsch will give you inside stuff
When you combine 3 thing, It is one of the powerful knowledge goinh with you for the rest of your live

At the age of 32. my 401k is amassed 73,000.00 and 30000.00 in taxble account. by follow simple rule

Answer 6

call up a brokerage.