Going digital has changed the very ways businesses function. Online trading facilities like the MetaTrader 4 download for Mac have enabled users to have direct access to the market without the interference of a broker, which saves money and prevents counterfeiting. A stable internet connection and a smart device are the only prerequisites to trade online.
Before investing, it is important to conduct thorough research and develop an understanding of certain key concepts. When learning the basics of stock trading, you should know a few essential terms to gain maximum profits.
Equity is the total asset value of a company that does not include debts. Say you own a company and sell it. The amount you get from the sale constitutes the equity. Equity value is an excellent litmus test for a company’s financial performance by assessing what is owned and what is owed. Purchasing a share from a company helps them manage their projects and operations and increases their currency equity. As an active investor, you might be allowed to pitch in on the workings of the business. The same does not apply if you are a sleeping partner.
2. Bid and Ask
The bid refers to the highest amount a buyer is willing to pay for the stock. The ask or offer price refers to the lowest amount the seller is willing to accept for their stock. Interested investors may submit purchase proposals to the sellers. The value of the highest proposal indicates the market demand for a particular stock. Similarly, the asking price reflects the supply patterns. Trade will happen only if a buyer cedes to the ask or the selling entity cedes to the bid. In the stock trading market, there is sometimes a difference between the bid and ask price, especially when the bid price is lower than the asking price. This difference is known as the bid-ask spread.
A stock trading exchange is a centralised marketplace (physical or digital) where various shares or stocks are bought and sold. Stock exchanges ensure organised and impartial trading while ensuring sufficient buyers and sellers so trading can occur promptly. Exchanges can occur electronically or through auctions. Auctions involve various bidders competing on the floor. You can perform electronic stock purchases with a MetaTrader 4 download for Mac. Digital exchanges are much quicker than auctions. Some major stock exchanges worldwide are New York Stock Exchange, Nasdaq, and London Stock Exchange, to name a few.
A broker is a financial expert who acts as an intermediary between the exchange and the buyers or sellers. They do not own any stocks but buy and sell stocks on behalf of others. They work for brokerage firms, offer investment advice, and sell stocks on behalf of their clients. Individuals and institutions with high net worth engage full-service brokers, as they want the complete package: profitable investments, sound investment advice, tax services, research, and portfolio management. Persons and entities with low net worth avail themselves of discount brokers who simply execute orders.
5. Bull and Bear Market
The bull market refers to a period in which the prices of stocks increase and the market has an upward trend. This period favours the sellers if there is sufficient interest in their stocks. On the contrary, a bear market refers to a period in which the prices of stocks fall, and the market has a downward trend. Instead of attracting eager investors, bear markets increase tentativeness as 20% plunges suggest poor company health.