What are stocks? Definition & Meaning - nextmarkets Glossary

The stock market is a place where individuals, brokers and companies come together to buy, sell and exchange shares in publicly held companies. People can either invest their own personal savings as individuals or manage large portfolios of financial assets on behalf of banks, companies and other organisations.

The stock market is heavily regulated, and exchanges can either take place within institutions or over-the-counter. Each country tends to have a central stock market, however, there may be several trading venues where investors can buy and sell stocks or shares. The stock market comprises a physical trading floor, but nowadays, exchanges can also take place online through the nextmarkets stock trading software.

There are two types of stock which are commonly traded: common and preferred. Common shares are those which also come with voting rights. This means that a common shareholder will have the right to vote in corporate meetings, and have a say about decisions made about the running of the company.

Preferred shares are ones which do not generally come with these privileges. In order to justify the right to vote, common shares tend to be much larger than preferred shares. Preferred shares are called this because they will receive preference over common shares when it comes to receiving dividends and/or assets in the event of the company going into liquidation. Traders on the stock market typically trade in preferred shares rather than common ones and traders should be made aware of this before starting their journey with nextmarkets.

Stock prices can fluctuate for a huge number of different reasons, but the general guiding principles remain the same, regardless of the specific nuances of a particular day. There are millions of financial traders making investments in the stock market every single day. Traders get to see these trades when they log into their nextmarkets profile.

These investors will all have different thoughts about what the value of a specific stock may be, and therefore the price which they believe the stock to be worth. The numerous transactions which take place between traders who sell and know the best shares to buy cause the overall market price to move up and down. If lots of people are trying to buy, the market price is likely to increase as people will be more willing to pay a higher price to secure their stocks.

There is no one definitive answer to why stocks are called stocks. One of the most popular theories as to why we ask the question “what are stocks?” and not “what are shares?”, is to do with the origins of trading. Some etymologists believe that the word “stocks” is a shortening of the word “livestocks” and comes from the markets where cattle, sheep and pigs (among other animals) were traditionally bought and sold.

Over many decades and centuries, trading evolved to include shares and services, not just physical commodities. However, this one etymological theory suggests that the name stocks was retained. Today, nextmarkets traders are familiar with the terms and they’re unlikely to be replaced with a more modern version.

The stock exchange is not merely a place for traders to make money – it also forms an important part of a country’s economy. Allowing traders to buy and sell stocks enables individuals and organisations to increase their capital and net worth. If the net worth of individuals and companies increases, so in turn does the economy within which they operate.

Allowing shares to be purchased in the first place will mean that more companies are able to get off the ground to begin with, and contribute to the overall size of the economy. This is why the stock market is so vital, and is protected with rules, regulations and organising bodies. nextmarkets is proud of their regulatory status, which gives consumers peace of mind that their online trading profile is regulated and secure.

There are plenty of resources available online which give an overview and introduction to the stock market for novice traders intending to make their first investments. Reading the nextmarkets guide on how to buy shares is a great place to start.

You can also use a nextmarkets share trading software to access tutorials, tips and demo accounts – everything you need to begin your journey as a stock trader. As a novice trader, it is really worth getting a proper introduction to the stock market before you start trading, as you will need a base level of understanding to really get to know how to make the most of your trades.

A stock trader is simply the name given to any person or organisation who invests in financial markets. These can be individuals investing their own personal wealth or professionals who trade with the assets of an organisation or institution. Stock traders use the nextmarkets platform to facilitate their trades.

There are different ways in which different types of stock traders will access and operate in the financial markets, but the name stock trader will apply to anyone who buys and sells stocks or shares. From the beginner making their first trade, to an investment banker with decades’ worth of experience in financial speculation, anyone who purchases and sells stocks has earned himself the title of “stock trader”.

What are stocks? They are a financial instrument, made up of shares of ownership of different companies and organisations. They can be bought and sold by traders online, over the phone, or via the nextmarkets share trading app. As the prices in the market fluctuate constantly, traders can capitalise on these changes in price, selling their stocks on again once the market price has increased and making profits on their trades.

If the trader is able to sell their shares in a company for more than they paid to purchase them, they will profit from the transaction. Do this over and over again and you can make a decent amount of money on the stock market, but it certainly isn’t as easy as it sounds!