What is stock trading and how does it work?

Stock trading or equities trading is an investment form that entails buying and selling shares belonging to companies on the secondary market to make a profit on price changes. It is, therefore, crucial to understand the primary and secondary markets.

In a primary market, companies issue new securities and offer them to the public for the first time. The transaction in the primary market takes place between issuers and buyers.

Investors buy and sell shares on the secondary market, issued on the primary market. The transaction in the secondary market takes place between seller and buyer. The stock exchange or brokerage company acts as an intermediary on the secondary market.

Companies on a stock market sell ownership stakes, also known as shares of stock, to investors to fundraise. Investors, who buy stock, technically become part-owners of a publicly-traded company.

How to invest in stocks?

Investors buy and sell stocks through a brokerage account established by a financial intermediary.

Investors, who prefer long-term profit often hold shares for years, intend to make substantial gains from share prices and dividends over time. Some, otherwise, aim to make short-term profits, hold stocks for a much shorter period, focus on which direction the stock will move next, and try to profit from that movement

Dividends, rising and falling prices are the main ways to profit from stock prices. News about competitors, upgrades and downgrades by analysts, economic and political news as well as investor sentiment influence stock prices.

  • DexInvesting offers to buy and sell stocks outright.
  • Investors can also trade stock price movements on our platform via CFDs with exclusive leverage ratios.