What are Stocks?

A stock is the term used to describe equity in publicly-listed companies. These are companies that have completed an Initial Public Offering (IPO) and allow retail traders to become shareholders in them. Equity is denominated in shares, and the moving price of one share of any company reflects its performance in the market alongside expectations of future performance.

When a company demonstrates that it is doing well, with quarterly reports that highlight revenues, profits, and earnings alongside other indicators of success, it can push up the price of its shares and generates returns for shareholders but however, poor performance can be accompanied by the opposite scenario in which prices fall. However, strong performance reports can also result in a downturn in a company’s share price if the future outlook has dimmed.

A Brief History of Stocks

The concept of selling equity in companies was popularized as early as the 16^th century, when governments that issued charters to businesses also began selling shares in these businesses to interested retail investors. When new democratic ideas helped inform free market principles in the US and beyond, regulations led to the formation of exchanges like the NYSE, where buyers and sellers can meet and come to an agreement on the price of a company’s shares. Derivatives, indices, and secondary markets appeared afterwards, leading to the investing environment we enjoy today.

Stock CFD trading

With Investous you can trade Contracts for Difference (CFDs) that use stocks as an underlying asset, allowing you to go long or short a company’s shares without actually owning them. This enables you to speculate on the moving prices of shares, even if you don’t have access to an exchange like the New York Stock Exchange or London Stock Exchange.

For instance, you’d buy contracts for IBM shares if you believe shares of the company will increase in price or sell them short if you think price will decrease. The beauty of trading CFDs is the ability to speculate on prices rises or falling while also being entitled to the dividends if the company announces payouts to shareholders. With a long list of major global company shares available, get in on the action today by joining Investous.