The stock market is a place where people buy and sell ownership in companies. These ownership units are called shares or stocks. Just how you buy Vegetables at the vegetable market!.
Enough with book worm definitions lets understand shares in a simple way😁.
A share represents a piece of a company's capital. When you buy a share, you are essentially investing your money into the company, which it uses for its operations and growth. As the company grows, the value of your share can increase. You can then earn a profit either by selling your shares at a higher price or if you trust in the company's future you hold it for long period to benefit from compounding.
Stock prices change because of supply and demand. When more people want to buy a stock, the price increases. When more people want to sell, the price decreases.
Another way this works is when a company just keeps growing over time—like how :Coca-cola did. As it grew, its share value went up too. Ofcourse this is more on the investing side of the stock market, but, it’s also a big reason why stock prices move.
Profit is made by buying stocks at a lower price and selling them at a higher price. This method is faster and is known as trading—you keep buying and selling stocks frequently in short bursts (within the same day, days, or months) to capture small price movements.
Another way to make profit is by holding stocks for the long run. This is called investing—you buy shares and just let them grow over time (months or years) as the company grows, instead of buying and selling quickly.
The market does not always go up. Prices can fall, and losses are possible. That’s why understanding risk management is essential before trading.