Stock Market

Fundamental Analysis

Trading Theories

Stock Options

Introduction

Option Trading

Call Option

Put Option

Options Strategies

Stock Options Prices

Types Of Option Orders

Compared to Stocks

Options Glossary

Forex Market

Introduction

Forex Quotes

Leverage and Margin

Calculating P & L

Sponsored Links

Stock Technical Analysis

Stock Ratings

All China Stocks

All Indian Stock

Stock Market

A stock market is a private or public market for the trading of company stock and derivatives of company stock at an agreed price; both of these are securities listed on a stock exchange as well as those only traded privately.

The expression 'stock market' refers to the system that enables the trading of company stocks (collective shares), other securities, and derivatives. Bonds are still traditionally traded in an informal, over-the-counter market known as the bond market. Commodities are traded in commodities markets, and derivatives are traded in a variety of markets (but, like bonds, mostly 'over-the-counter').

Stock Options

A stock option is a contract between 2 parties (a buyer and a seller) that gives a person (the buyer of the contract) the right, but not the obligation, to exercise the contract on or before a fixed future date (the exercise date or expiration) to buy or sell the underlying stock at an agreed price.

If you purchase a stock option for the right to buy the shares of ABC company for $10 today, you can exercise that right to buy ABC company's shares at $10 anytime in the future before the contract expires no matter what price ABC's shares may be trading at that time. (Imagine that stock trading at $100 and you own the right to buy it for only $10!) Hence buying and selling stock options is not the same as buying and selling the shares itself. You are actually buying and selling the right to buy or sell the underlying asset at certain pre-determined prices.

Forex Market

The Foreign Exchange market, also referred to as the "Forex" or "FX" market is the largest financial market in the world, with a daily average turnover of US$3.2 trillion. 

"Foreign Exchange" is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).

There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit, or speculation.