Stocks are an important part of the global economy, allowing companies to raise the funds needed to run their businesses by selling shares (or ownership) to the public, which can be bought and sold through exchanges such as the New York Stock Exchange (NYSE) or Nasdaq.。In limited circumstances, shares may be sold privately。Specific regulations established by the Securities and Exchange Commission (SEC) govern how companies manage or distribute their stock。

Shares can be common stock, giving shareholders the right to vote on certain corporate decisions, or preferred stock, where shareholders do not have voting rights but are usually guaranteed to pay their fixed dividends in perpetuity.。

Development history of stocks

The Romans were the first to use stock-like tools to ensure that their citizens benefited from public works.。Contractors hired by the state sell stock-like instruments in their businesses to raise money for projects, known as "lease holdings."。

The 1600s were the era of the East India Company (EIC)。EIC, known for its trade in goods throughout the Indian Ocean region, is widely regarded as the world's first joint-stock company, and today's limited liability companies (LLCs) are descendants of joint-stock companies.。

Comparison of Stocks and Other Financial Instruments

Bonds, unlike stocks, are debt-based, meaning that investors lend money to the company or government that issued the bonds and earn interest in return。Bondholders do not have ownership of the company, however, they may have more protection than shareholders。Stocks are usually traded on exchanges, while bonds are usually traded over the counter (investors need to deal directly with the issuing company, government or other entity)。

Futures and options are different from stocks because they are derivatives and the value is based on another asset, such as commodities, stocks, currencies, etc.。They are contracts based on fluctuations in the underlying asset rather than ownership of the asset itself。

How the Stock Market Works？

"Stock market" is a broad term that covers a collection of markets in which listed companies regularly buy, sell and issue shares.。

The stock market is the general term for these markets and consists of individual stock exchanges.。The most famous stock exchanges in the United States are the New York Stock Exchange (NYSE), Nasdaq, Better Alternative Trading Systems (BATS) and the Chicago Board Options Exchange (CBOE).。These exchanges, along with several others, make up the U.S. stock market.。

Although referred to as the "stock market" (or "stock market"), other financial instruments - such as bonds, commodities, currencies, and derivatives - are also traded on the stock market。

What are the different types of stocks？

Ordinary shares

Owning a company's stock usually falls into this category.。One of the main benefits of common stock is voting rights - each share is usually equivalent to one vote。Investors holding common stock can attend the annual general meeting and vote on corporate issues, such as electing board members, stock splits, or the company's overall strategy。

Preferred Stock

Investors who do not need to vote on corporate issues and are interested in getting a consistent dividend check can choose preferred stock。Many characteristics reflect the characteristics of bonds, for example, the company can buy back preferred shares at an agreed price。

Common Stock Terms

Free / public holdings: Shares that have been placed on the market and publicly traded through the exchange。
Stock split: If a company wants to make it easier for investors to understand its share price, a stock split is made。This will not change the market value of the company or the total value of the shares you own, but will increase the number of available shares。
Shareholders' equity: the most basic form is the company's remaining assets after paying all bills (liabilities), which can be used to better understand the value of stocks。
Short selling: when investors want the share price to fall, they can "short" the position, which requires borrowing shares from a broker or financial institution。If the price falls, you can buy the stock at a lower price and make a profit; if the stock price rises, you will lose money by buying it back at a higher price later。
Stock Purchase Plan: Employers Offer Discounted Shares to Employees。
Blue-chip stocks: Large, well-capitalized companies are blue-chip stocks, usually traded on major stock exchanges such as the New York Stock Exchange or Nasdaq.。
Broker: The broker will execute trades on behalf of the investor / trader and will usually charge a commission in return。
Margin buying: Margin buying is borrowing money from an individual's securities firm to purchase securities, and the company's loan is secured by the securities purchased by the customer.。
Pink sheet stocks: Small companies that trade below the $5 threshold are often referred to as "penny" or "pink sheet" stocks.。They are traded over the counter and the risk can be high。
Market / Limit / Stop Loss Orders: When opening a position, investors need to choose between a range of order types。Market orders are executed at one of the following available prices, and there may be a risk if there is a large spread in the stock price (the difference between the buyer's and seller's quotes)。A limit order is an order to buy or sell a security at or above a specified price, which indicates that the order may not always be executed, especially in the case of rapid market fluctuations。Stop loss orders allow investors to set a trigger price in the system, which will only be executed when the price reaches the desired level。When this stop price is reached, the order is automatically converted to a market order。

Dividends are not guaranteed and must be authorized by the company's board of directors。Margin borrowing increases the level of market risk and therefore has the potential to amplify gains and losses。