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Equity trading

In finance, equity trading is the buying and selling of company stock shares. Shares in large publicly traded companies are bought and sold through one of the major stock exchanges, such as the New York Stock Exchange, London Stock Exchange or Bombay Stock Exchange, which serve as managed auctions for stock trades. Stock shares in smaller public companies are bought and sold in over-the-counter (OTC) markets.

Equity trading can be performed by the owner of the shares, or by an agent authorized to buy and sell on behalf of the share's owner. Proprietary trading is buying and selling for the trader's own profit or loss. In this case, the principal is the owner of the shares. Agency trading is buying and selling by an agent, usually a stock broker, on behalf of a client. Agents are paid a commission for performing the trade.

Major stock exchanges have market makers who help limit price variation (volatility) by buying and selling a particular company's shares on their own behalf and also on behalf of other clients.

Over the past 15 years with the popularity of the internet and discount brokerage firms, it has become increasingly luring for the average investor to partake in their own financial planning and direction of their future. Although trading can be incredibly stressful and dangerous financially, many people have made it their profession in place of a 9 to 5 job. Individuals that pursue this non-mainstream career usually will have a knack for technical analysis, money management, tape reading and trader's psychology as well as enjoy working in a fast paced competitive environment.

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Source: Wikipedia | The above article is available under the GNU FDL. | Edit this article



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