The stock market is a place where people can buy and sell shares of companies. By investing in stocks, you can get a piece of a company and possibly make a profit if the value of that share goes up. A person can invest directly in individual companies or through funds like mutual funds and exchange-traded funds.
The stock market acts as a kind of matchmaker, pairing stock sellers with buyers. The sellers may be companies that are offering their shares for sale, through an initial public offering (IPO), or they could be other individuals who have already bought the shares and are now looking to resell them for cash. The buyers might be private investors or they could be institutions like pension funds, insurance companies, mutual funds, exchange-traded funds and banks. Robo-advisors that automatically invest for individuals are also major participants in the market.
In addition to price, other factors that influence the value of a share include its growth potential, stability and strategic position in its industry. The economy and events that affect global investor sentiment play a big role as well.
Once you’ve done your research and decide on a company that you want to purchase shares of, you will need to put in an order to do so. You will generally use the prompts on your investment account to enter the ticker symbol (a string of 1 to 5 letters that’s unique to an investment) and then determine how many shares you want to purchase at that ticker price.