Question

Describe the nature and the general treatment of Trading Stock. (400 words)

Answer 1

Stock trading is the process of buying and selling stock. Companies can raise money without taking debt by issuing stocks. Stockholders expect the company to grow and the share prices to rise. They expect share of the profits in the form of dividends. Stock prices on the market are determined by the demand and supply. The traders try to predict the fluctuations in the stock prices and force the buyers to buy it.

In stock trading there are buyers, sellers and brokers. Broker connects the buyers with the sellers.

Bear market is the situation where the stock prices are falling and a bull market is a period when stock prices are rising.

Taking a long position in the market means that buying stock with an intention to sell it later. Taking a short position means selling the stocks in the market.