The main purpose why people get up in the morning and go to whatever professions or jobs they are good in is to generate some income or wealth. This is the precursor to any trading or commercial activity. Built on this foundation are companies and huge conglomerates. The success or otherwise of a company depends on various factors and one of the best indices for gauging the performance of a company is without doubt the stock market.
Stock market is a place where a number of scripts are traded. It could be a small stock exchange with a few companies or could be more broad based with a large number of companies. What are stocks by the way? These are nothing but a share of a company bought and sold over stock exchanges. These shares yield interests which are also named as dividends. The higher the dividend and higher the value of each share or script the better the company is perceived to be in the eyes of investors and the general public.
The value of stocks are entirely market driven and go up or down based on the demand of a company’s script. The higher the demand the higher the market value and vice-versa. The demand for a company’s script is driven by its market perception, its performance over the past few years, its business forecast for the next few years, general economic condition, product category etc.
So if you are a investor and wish trade stocks or bonds it would be better if you gathered more information as to how the stock market dynamics work before taking the plunge. It is also advisable if you are a small investor, to start with low sums of money initially and then go up gradually once you have a decent knowledge about the market.