Stock markets are in the nature of virtual markets where sellers and buyers of stocks and decide on a price of trade. Stock markets used to involve transactions in a physical location, but that has long changed as most stock exchanges are increasingly becoming virtual, composed of a wide network of computers where stock trades are made and recorded electronically.

Stock markets are secondary markets that provide an avenue for existing owners of shares to successfully transact with potential buyers.

Stock trading criteria

The criteria used for classifying stock traders are;

Active trading

This is typically what an investor does when he’s constantly active in the market. To be active in the market, you must place 10 or more transaction in the stock market per month. Typically, people that are involved in this kind of trading are traders that rely heavily on how the timing of the market works, trying to always take advantage of short term events and turn them into profit in a few weeks or months.

Day trading

This is a strategy of trading stock employed by investors who are constantly playing hot potato with stock – This category of people buy, sell and close their positions of the same stock in a single trading day. The basic objective of a day trader is to take advantage of the market fluctuations to make profit within minutes hours or days.

Passive investing

This is the kind of investment that long term investors operate with. The purpose of their actions is quite different. They do not transact often and that is why their approach to buying and selling is called passive. Instead of relying on the present tactical analysis and the condition of the marker, passive traders use fundamental analysis to predict the initial strength of the business and then buy shares with an intent to be rewarded after year’s or decades.

Beginners guide; Terminologies

Here are some terminologies that you need to get acquainted with if you are a beginner in stock trading.

Bull Market: This is a situation that happens when the entire market experiences a prolonged period of rise in price of stock.

Dividend: This is a part of a company’s earnings that is paid stock investors either quarterly or annually.

Execution: This is a term used to represent a successful completion of an order.

Order: This represents an investors bid to buy or sell an amount of stock.