What are stocks? Different types of stocks

Written by Volodymyr
Updated 5 months ago

Stocks are  security issued by a joint-stock company, in other words, the issuing company. All investors who bought shares became co-owners of the company. A share confirms that its owner has a share in the company, even if it is very small.
Why should a company do this if it will have to share profits and transfer management into the hands of others? It's all about money. To develop a business, an enterprise needs additional finances. You can get them from a bank by taking out a loan or by issuing bonds. But then the organization becomes a debtor for many years.

Shares help to get a large sum without getting into debt. A professional intermediary is involved in the issue - an investment bank. It takes on all the hassle associated with documentation and finding investors. When the preparatory work is completed, the securities begin to be listed on the stock exchange. They can be bought by anyone who has access to the trading platform (the investor carries out transactions through a broker).

Stock trading is the process of buying and selling shares of a company that is publicly listed on a stock exchange. The goal is to potentially profit from price fluctuations, but it is important to remember that all investing and trading involves risk.

What does it mean to trade stocks? The goal of traders is to buy stocks at low prices, hold them for a period of time, and then sell them at higher prices. This is different from stock investing, which involves buying and holding securities for the long term.

Stocks are generally difficult to group into specific categories. Some stock traders use these categories to inform their trading strategies, focusing on stocks in specific groups.

Stocks type

Blue Chip

Well-established companies with stable share prices that are typically held during periods of market volatility.

Growth Stocks

Stocks that have demonstrated above-average price growth over a long period of time.

Value Stocks

Stocks that trade at relatively low prices given the company's fundamentals, such as sales, profits, or dividend payments.

Penny Stocks

Small company stocks that typically trade for less than £1 per share in the UK or $5 per share in the US

Dividend Stocks

Stocks that provide regular payments to investors for each share they hold. Dividend stocks, which are growth stocks, pay dividends that increase each year. High-yield stocks are stocks whose dividend yield is higher than the average market yield.

Our trading platform allows you to trade shares from a wide range of popular markets, including the USA, UK, Germany, and more. You can make the most of your trading experience with leverage and low spreads. With our advanced trading tools, you have the ability to manage your profits and losses.

We wish you successful trading with ArtСap !

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