Frequently asked questions on stock trading answered
Introduction to stock trading
You would be familiar with the words stock market, investing, trading, etc. These terms refer to the processes of buying and selling of shares of publicly owned companies. Large private companies will convert into public when there is a need for capital due to the expansion of operations, repayments of debts, and other financial requirements. To raise money for these financial needs, companies will release shares to the public via the stock exchanges. Investors from the public can spend their money to buy these shares and sell them later to other traders for higher profits. There will be some brokerage companies that help these investors with the processes in return for small commissions and fees. The prices of stocks will vary from day to day, and you can get to know the current price of a stock using various platforms like online websites and mobile applications. If you are based out of Hong Kong, you can use Hong Kong stock quotes to get to know the bid-ask price of stocks on the current trading day along with other supplemental information. Although stock trading is being practiced for years, there are still some queries among the masses. In this article, let us try to answer some of these questions in brief.
Frequently asked questions on stock trading
What is the share market?
The share market is the marketplace where all the transactions of buying and selling of securities like stocks, bonds, mutual funds, and the likes take place. The stock market is the most popular form of a share market.
What is the spread of trading?
A spread is a difference in the amount between the price a buyer is willing to give and the price a seller is asking for.
What is margin funding?
Margin funding is the process of buying stocks more than you can afford to, with the help of the amount borrowed from the brokerage firm itself. You should repay the borrowed money regardless of the outcome of your bid in the listings.
What is the rights issue?
The rights issue is the process in which a company will issue new stocks and ask the existing shareholders to buy them to raise money for the financial urgency of the company. The price per stock in the rights issue will be less than that of the original price to appreciate buyers to buy them. It applies only to existing shareholders.
What is a warrant in stock trading?
A warrant is the certificate of proof, a seller will give to a buyer, that will allow the buyer to come back after the agreed number of days to get the stocks for the same price, irrespective of the stock’s price at that time. The buyer should pay an amount to buy the warrant voucher. If the stock price increased in the future, the buyer will use the warrant to buy the stocks at a lower price. But if the stock price in the future is very less than the agreed amount, the buyer will ignore the warrant.