Stock market knowledge share ebook secret money earth world E-Book

Thomas Schröter

• Herausgeber: tredition
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 112

Veröffentlichungsjahr: 2025

Beschreibung

In "Stock Market Knowledge," readers gain a comprehensive insight into the world of the stock market and the financial markets. This book is aimed at both beginners who want to learn the basics of stock trading and experienced investors who want to deepen their knowledge and develop strategic approaches. The reader is taken on an exciting journey through the history of stock markets, the various market mechanisms, and the different types of financial instruments. From the definition and function of a stock market to the role of indices and the differences between stocks, bonds, and other investment vehicles—"Stock Market Knowledge" explains all essential aspects in a clear and understandable way. Special attention is paid to investment strategies, including proven methods such as the buy-and-hold strategy and the dividend strategy. Practical tips on trading mechanisms, order types, and the selection of suitable brokers round out the book and provide readers with the tools to make informed decisions. Additionally, important topics such as stock valuation, the influences on stock prices, and the role of news and market psychology are covered. "Stock Market Knowledge" is not only a guide to stock trading, but also a key to a better understanding of the economic relationships that shape our financial markets. With clear explanations, illustrative examples, and practical advice, this book is an indispensable reference for anyone who wants to invest successfully in the stock market.

Leseprobe

Stock market knowledge

Written by

Thomas Schröter

Legal Notice

All characters and events in this work are fictitious. Any resemblance to living or dead persons, or to existing organizations, places, or events is purely coincidental and unintentional.

This work is a work of fiction. It is provided for entertainment and information purposes only and does not constitute legal, medical, psychological, or other professional advice. The technologies, scientific concepts, or social developments presented in this book are speculative and for narrative purposes.

The author assumes no liability for damages or losses that may arise directly or indirectly from the use of the information contained in this work.

Foreword

Welcome to "Stock market knowledge"! My name is Thomas Schröter, and I am delighted to be able to accompany you on this journey through the fascinating world of stock markets and financial markets. This book is aimed at anyone interested in investing, whether you are a complete beginner or an experienced investor.

In recent years, I have observed how interest in shares and financial markets has grown rapidly. At the same time, however, it is more important than ever to have sound knowledge in order to be successful in this dynamic and often challenging environment. The aim of this book is to explain the basics of stock market trading in an understandable way and to give you the tools you need to make informed decisions.

We will look at various aspects of investing - from the basic concepts and history of the stock markets to advanced strategies and current trends. You will not only learn how the markets work, but also how to develop your investment strategy and successfully manage your portfolio.

I invite you to embark on this exciting journey and discover the secrets of investing together with me. May this book serve as a valuable resource to help you achieve your financial goals and expand your knowledge of the stock market.

Good luck and happy reading!

Thomas Schröter

Chapter 1: The basics of the stock market

What is a stock market? (definition and function)

A stock exchange is an organized marketplace where securities (such as shares, bonds), commodities, derivatives and other financial instruments are bought and sold. It provides a platform on which buyers and sellers come into contact with each other in order to trade. The stock exchange is the central place where the price of these assets is determined by supply and demand.

Definition

A stock exchange can be described as a trading venue that enables the regulated and monitored trading of financial products. It ensures that all transactions take place according to fixed rules, thus protecting both buyers and sellers.

Function of the stock exchange

The stock exchange has several important functions:

Price discovery (market pricing): One of the main functions of the stock exchange is to determine the fair market price for securities and other financial products. This is done by matching supply and demand. Buyers offer the prices they are willing to pay and sellers indicate the prices at which they wish to sell. The intersection of these interests results in the market price.

Liquidity: The stock exchange ensures that there are a large number of buyers and sellers at all times, so that securities can be traded easily. This ensures that investors can quickly convert their assets into cash, which boosts confidence in the market.

Transparency: Another key function of the exchange is to provide information about the market. All market participants have access to the same data, which enables transparent pricing. Stock exchanges continuously publish prices and transaction data so that investors can make informed decisions.

Security and regulation: Exchanges are regulated and supervised to ensure fair trading practices. They enforce rules to prevent insider trading, market manipulation and fraud, ensuring the integrity of the market.

Raising capital for companies: Companies use the stock market to raise capital by selling shares or bonds to investors. This enables companies to invest in growth, research or expansion.

Capital accumulation for investors: Investors can invest their capital on the stock market to generate profits. By buying shares or bonds, they can participate in the success of companies and receive dividends or interest.

Types of stock exchanges

Stock exchanges: Markets on which company shares are traded (e.g. New York Stock Exchange, NASDAQ, Deutsche Börse).

Commodity exchanges: Exchanges on which commodities such as oil, gold and agricultural products are traded (e.g. Chicago Mercantile Exchange).

Currency exchanges: Markets on which currencies are traded (e.g. Forex market).

Derivatives exchanges: platforms on which financial instruments such as options and futures are traded.

In summary, the exchange provides an organized, secure and transparent environment for trading financial products to serve both companies and investors.

History of stock exchanges (origins, important milestones)

The history of stock exchanges is deeply rooted in the economic development of mankind and goes back several centuries. Stock exchanges developed out of the need for organized marketplaces where investors, companies and governments could raise capital for growth, trade and investment. Here are the most important stages in the history of stock exchanges:

1. early times: origin of trading centers

Ancient markets: Markets where goods and securities were traded already existed in ancient times. These early markets offered trading opportunities for goods such as grain, metals and spices.

14th century: First stock exchanges: The first stock exchanges in the modern sense emerged in the late Middle Ages. Merchants and investors met in the cities of Flanders and Italy, particularly in Bruges, Antwerp and Venice, to conduct trade transactions.

Bruges (Belgium): The term "bourse" probably comes from the square in front of the Van der Beurse family's house in Bruges, where merchants met regularly. This gave rise to the term "bourse" (French: "bourse", Dutch: "beurs").

2. 16th and 17th centuries: Emergence of modern stock exchanges

Amsterdam and the first modern stock exchange (1602): The Amsterdam Stock Exchange is considered to be the first real stock exchange in the world, founded by the Dutch East India Company (VOC). VOC shares were traded here, which the company issued to raise capital for its global trading activities. The exchange enabled investors to buy and trade shares in the company, laying the foundations for the modern stock market.

London Stock Exchange (1698): In London, stock exchange activities first emerged in coffee houses where merchants, bankers and investors came together to trade securities. The most important of these coffee houses, Jonathan's Coffee House, became the center of securities trading, which led to the founding of the London Stock Exchange.

3. 18th and 19th centuries: Expansion of the stock exchanges

New York Stock Exchange (1792): In the USA, the New York Stock Exchange (NYSE) was founded when 24 brokers and traders signed the so-called Buttonwood Agreement. They began trading on Wall Street under a buttonwood tree. The NYSE quickly became one of the most important stock exchanges in the world.

Paris Bourse (1724): The Paris Bourse officially came into being in 1724 and played a central role in the development of the French financial market. It developed into one of the most important European stock exchanges.

Industrial Revolution: With industrialization in Europe and North America, the stock markets also grew strongly. Companies needed capital to finance machinery and factories, which led to a boom in joint stock companies and stock market activities.

4th 20th century: Globalization and crises

Stock market crash of 1929: One of the most defining moments in stock market history was Black Thursday 1929, which triggered the Great Depression. This crash led to comprehensive regulation of the stock market and the introduction of protective mechanisms to prevent market manipulation and speculation.

After the Second World War: After the war, the stock markets flourished again, and in the USA in particular, the stock market experienced a boom. Globalization and the emergence of multinational corporations ensured that more and more international investors participated in the markets.

Technologization and electronic stock exchanges: In the late 1980s and 1990s, stock exchanges began to introduce electronic trading. This accelerated trading and reduced transaction costs. Exchanges such as NASDAQ (founded in 1971) became pioneers in electronic trading and specialized in technology companies.

5. 21st century: Modern stock exchanges and new challenges

Dotcom bubble (2000): The dotcom bubble and its burst at the beginning of the 21st century highlighted the risks of speculative overvaluations. Many technology companies that had skyrocketed in the 1990s lost drastically in value.

Financial crisis of 2008: The global financial crisis of 2007-2008, triggered by the collapse of the US real estate markets and Lehman Brothers, led to another major stock market crash and highlighted the risks of complex financial products such as mortgage bonds and derivatives.

Rise of the emerging markets: Stock exchanges in emerging economies such as China, India and Brazil are becoming increasingly important. The Shanghai Stock Exchange and the Hong Kong Stock Exchange in particular have become important international trading centers.

Cryptocurrencies and blockchain: Since the launch of Bitcoin in 2009, a new market for digital currencies has developed. Many see these as the next big development in the financial markets, even if they are still relatively volatile and unregulated.

Important milestones summarized

1602: Founding of the Amsterdam Stock Exchange - the first modern stock exchange

1792: Founding of the New York Stock Exchange - beginning of organized trading in the USA

1929: Stock market crash in the USA - start of the Great Depression

1971: Introduction of NASDAQ - first electronic stock exchange

2000: Dotcom bubble - example of speculative overheating

2008: Global financial crisis - disclosure of systemic risks

2020s: Rise of cryptocurrencies and digital assets as a new form of stock market trading

Over the centuries, the stock exchange has evolved into a global financial instrument that contributes significantly to the modern economy and will be further transformed by technological developments in the future.

The role of stock exchanges in the modern economy

Stock exchanges play a central role in the modern economy by acting as hubs for the trading of financial instruments and facilitating the flow of capital into companies and economies. Their importance goes far beyond the mere trading of securities and encompasses many economic, social and global aspects.

1. raising capital for companies

One of the most important functions of the stock exchange is to provide a platform for companies to raise capital. Companies can raise capital from investors through initial public offerings (IPOs) or bonds without having to rely on bank loans. This enables them to invest in innovation, research, infrastructure and expansion, which promotes economic growth in the long term.

2. value creation and wealth creation

For investors, stock markets offer the opportunity to build wealth by investing in companies and participating in their growth and profits. Investors can participate in the success of companies through share price gains or dividends. The stock exchange thus creates a link between investors and companies, resulting in mutual value creation.

3. transparency and market information

Stock exchanges are highly regulated markets that create trust through transparency in pricing and the availability of information. All market participants, whether institutional investors or private investors, have access to the same price information and company reports. This transparency is crucial to ensure fair trading practices and prevent market manipulation.

4 Liquidity and tradability

Exchanges ensure high liquidity by bringing buyers and sellers together, making it possible to buy or sell securities quickly and easily. This gives investors the security of knowing that they can convert their investments at fair market prices when needed. A fluid trading environment also facilitates the efficient functioning of the entire financial system.

5 Risk management and diversification

Stock exchanges allow investors to spread their risks and invest in a variety of companies, industries and even international markets. They also have the opportunity to use complex financial instruments such as derivatives to hedge risks or speculate on market movements. This allows both private and institutional investors to hedge their portfolios against market volatility.

6. economic stability and prosperity

Stock exchanges contribute to overall economic stability through the efficient allocation of capital. Companies that have access to capital can grow and create jobs, which helps to promote prosperity and improve living standards in an economy. In developed economies, stock exchanges play a key role in the allocation of resources and capital flows.

7 Innovation and technology promotion

Technology companies in particular have used the stock market to raise significant amounts of capital for research and development. Innovations in sectors such as IT, biotechnology and renewable energies have been strongly driven by the capital markets. Stock exchanges thus enable the transfer of capital to promising industries and create the basis for technological progress and economic growth.

8 Globalization of the financial markets

Stock exchanges play an important role in the globalization of financial markets by giving companies worldwide access to international investors. This promotes the integration of economies and capital flows across national borders and enables companies to operate and expand on a global scale. The globalization of stock exchanges has greatly facilitated international trade and investment.

9 Regulation and market stability

Stock exchanges are strictly regulated to ensure fairness and stability in the financial system. Regulatory authorities enforce rules to prevent market manipulation, insider trading and other illegal practices. This regulation ensures that confidence in the financial markets is maintained, which in turn supports stable economic development.

10. stimulating innovation and new economic sectors