Stock Market FAQs – Everything You Need to Know

The stock market is a public marketplace where shares of publicly traded companies are bought and sold. It provides companies with access to capital and gives investors a chance to earn returns based on company performance. Stock markets operate globally—some of the major ones include:

• New York Stock Exchange (NYSE)
• NASDAQ
• London Stock Exchange (LSE)
• Tokyo Stock Exchange (TSE)
• Bombay Stock Exchange (BSE)
• Shanghai Stock Exchange (SSE)

Learn more: Investopedia - Stock Market Basics

Companies list their shares via an initial public offering (IPO). Once listed, their shares are traded among investors on stock exchanges. Prices fluctuate based on supply and demand, economic indicators, earnings, and global events. Brokers and trading platforms facilitate these transactions.

Almost anyone can invest in the stock market today. All you need is:

• A trading account (also called a brokerage account)
• Valid identification and bank account
• Internet access or a trading app

In most countries, platforms like Robinhood, eToro, Zerodha, Fidelity, or Interactive Brokers allow easy access for retail investors.

• Common stocks – Offer voting rights and dividends
• Preferred stocks – Offer fixed dividends but usually no voting rights
• Growth stocks – Companies expected to grow faster than the market
• Value stocks – Undervalued companies trading below their intrinsic value
• Blue-chip stocks – Reliable, established companies like Apple or Microsoft

Stock prices are influenced by many factors:

• Earnings reports
• Global economic conditions
• Inflation and interest rates
• Investor sentiment
• Political instability or major news events

Example: When inflation rises, central banks may increase interest rates, which can lead to stock price drops.

A stock index tracks a group of stocks to measure overall market performance. Major global indices include:

• S&P 500 (USA)
• Dow Jones Industrial Average (USA)
• FTSE 100 (UK)
• Nikkei 225 (Japan)
• Sensex (India)

These indices reflect market trends and investor confidence.

Yes, the stock market involves market risk, liquidity risk, and volatility. However, risk can be managed through:

• Diversification
• Long-term investing
• Research and analysis
• Avoiding emotional decisions

Remember: No investment is 100% safe. Learn about risk here: SEC - Beginners’ Guide to Investing

Here are the basic steps:

1. Choose a reliable brokerage platform
2. Set clear financial goals
3. Start small and invest in index funds or ETFs
4. Monitor the market and continue learning

Helpful tool: Google Finance or Yahoo Finance

Day trading involves buying and selling stocks within the same day to take advantage of short-term price movements. While it can be profitable, it’s also very risky and requires deep market knowledge and technical analysis skills.

Dividends are payments made by companies to their shareholders, usually from profits. Not all companies pay dividends—tech firms often reinvest earnings instead.

Yes, especially if you:

• Invest in high-risk penny stocks
• Trade on margin or with leverage
• Make decisions based on rumors or hype

But long-term, diversified investing generally lowers the risk of total loss.

Taxes vary by country. In general:

• Capital gains tax applies to profits
• Dividend tax applies to income from dividends

Check your local tax authority or a certified accountant for specific rules.

• Bloomberg
• Reuters
• Yahoo Finance
• CNBC
• TradingView

• ETFs (Exchange-Traded Funds): A basket of securities traded on an exchange
• Mutual Funds: Professionally managed funds pooling money from investors

Both provide diversification, but ETFs can be bought/sold like stocks.

Some beginner-friendly platforms include:

• Coursera: Financial Markets
• Khan Academy - Investing Basics
• [YouTube Channels like The Plain Bagel or Graham Stephan]