Ethiopian Does NOT have a Stock Market YET!
What are Stocks? Why do you need a trading plan? What are trend indicators? These are some questions that people need to know to enter in the stock market. It can be a bit difficult to understand all of this, but here, in Ethiopian Stock Market, we have the needed and more to start in this world. We have some posts to learn about this area and improve your knowledge from stock exchange.
What are Stocks?
Securities or certificates representing fractional ownership of a company purchased as an investment. How much you own depends on how many shares of stock you possess versus how many shares have been issued.
Stock market
Stock market, equity market or share market is the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) of stocks (also called shares), which represent ownership claims on businesses; these may include securities listed on a public stock exchange, as well as stock that is only traded privately, such as shares of private companies which are sold to investors through equity crowdfunding platforms. Stock market is the overall facilitation of the buying and selling of shares of ownership in companies.
Trader
Someone who buys and sells stocks and options frequently with the objective of short-term profit.
Investor
Someone who looks at the Big Picture, ignoring the day-to day price fluctuations, focusing instead on making investments for the long haul.
Stock exchange
A stock exchange is an exchange (or bourse) where stockbrokers and traders can buy and sell shares of stock, bonds, and other securities. Many large companies have their stocks listed on a stock exchange. This makes the stock more liquid and thus more attractive to many investors. The exchange may also act as a guarantor of settlement. Other stocks may be traded “over the counter” (OTC), that is, through a dealer. Some large companies will have their stock listed on more than one exchange in different countries, so as to attract international investors.
Stock exchanges may also cover other types of securities, such as fixed interest securities (bonds) or (less frequently) derivatives which are more likely to be traded OTC. Trade in stock markets means the transfer (in exchange for money) of a stock or security from a seller to a buyer. This requires these two parties to agree on a price. Equities (stocks or shares) confer an ownership interest in a particular company.
Stock investor
Participants in the stock market range from small individual stock investors to larger investors, who can be based anywhere in the world, and may include banks, insurance companies, pension funds and hedge funds. Their buy or sell orders may be executed on their behalf by a stock exchange trader.
Some exchanges are physical locations where transactions are carried out on a trading floor, by a method known as open outcry. This method is used in some stock exchanges and commodities exchanges, and involves traders shouting bid and offer prices. The other type of stock exchange has a network of computers where trades are made electronically. An example of such an exchange is the NASDAQ.
Investment
To invest is to allocate money in the expectation of some benefit in the future. In finance, the benefit from an investment is called a return. The return may consist of a gain (or loss) realised from the sale of property or an investment, unrealised capital appreciation (or depreciation), or investment income such as dividends, interest, rental income etc., or a combination of capital gain and income. The return may also include currency gains or losses due to changes in the foreign currency exchange rates.
Institutional Investor
A person or organization that trades large enough quantities of shares that the trades qualify for preferential treatment and lower commissions. Institutional investors enjoy fewer protective regulations and are usually more knowledgeable and better able to protect themselves from risk. Individual investors often follow sizable stock trades initiated by institutional investors since they can have a significant effect on a stock’s price performance, not to mention market sentiment. Investors generally expect higher returns from riskier their investments. When a low risk investment is made, the return is also generally low. Similarly, high risk comes with high returns.
Investment in the stock market is most often done via stockbrokerages and electronic trading platforms. Investment is usually made with an investment strategy in mind.