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Page 1: Equity Market

Equity Market

Bywww.CandlestickForums.com

Page 2: Equity Market

Equity market is another name for a stock market.

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The term equity also refers to the value of someone’s ownership of a business,

property, or a shareholder’s partial ownership in a business.

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An equity is a stock or stock share not bearing fixed interest.

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In other words an equity’s value rises and falls with that of a company and its

shares. It does not pay guaranteed interest as with a bond.

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Use of the term equity market reminds us that a stock market investment is

owning shares of a company’s assets.

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An equity market is a public market where stocks are listed, bought, and

sold.

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An equity market, or stock market, has members who do the buying and selling.

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Everyone else pays a commission for this service in order to buy stock or sell

stock.

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Now, in the computer age, exchanges such as the NASDAQ are virtual and all

activity is in a computer system.

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This contrasts with the traditional “outcry” system of the New York Stock

Exchange (NYSE) where orders flow through a real person, a floor broker.

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Equity markets allow companies to raise money without borrowing.

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Rather than incurring debt the company sells ownership shares, giving away

future profits and giving a vote in the affairs of the company for each share.

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Although a public stock company may not incur debt by issuing stock, it always

runs the risk of a takeover.

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An outside party can purchase a sufficient number of stock shares to

control the company’s board of directors, name its own management

and take over the company.

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Besides allowing a company to raise money, equity exchanges offer very

liquid investments.

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Stocks are almost always easier to buy and sell and a clear market value than

real estate, for example.

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There are equity exchanges throughout the world.

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The New York Stock Exchange and NASDAQ are the two large American

exchanges.

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Canada has the Toronto Stock Exchange. European exchanges include the London

Stock Exchange, the Paris Bourse, and the Deutsche Börse.

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Asia has the Hong Kong Stock Exchange, the Tokyo Stock Exchange, the Bombay Stock Exchange, and the Shanghai Stock

Exchange.

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In Latin America there are the BM&FBovespa in Sao Paolo, Brazil and BMV, the Bolsa Mexicana de Valores.

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In the United States market indexes such as the S&P 500 help traders and

investors follow the market sectors.

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A problem with dealing in many equity markets outside of the United States is

the lack of transparency.

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The United States Securities and Exchange Commission (SEC) oversees American stock markets, helping to

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insure that illegal insider trading, for example, does not enrich some at the

expense of others.

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Although the SEC does not do a perfect job it provides an oversight that is sadly missing in many markets outside of the

United States.

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Even basic stock information may be lacking on some foreign exchanges.

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Unless the investor has excellent inside information in some foreign exchanges, the best stock market investing strategy

may well be to trade and invest at home.

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Trading in the equity market requires learning the basics of stock market

investing.

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As stock prices move up and down traders and investors buy stock and sell

stock in search of a profit.

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A day trader will buy and sell within a day, typically holding no stock positions

overnight.

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Long term investing engages in techniques like value stock investing in order to capture a stock at a low price and allow it to appreciate in value over

many years.

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