How Stock Market Works

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How the Stock Market Works Almost everyone has heard of Wall Street, but not many people know much about it. The stock market is a great way to make cash easily, but if someone goes into the stock market blind with no background information, they can lose a lot of money. There are many things a person should know about the stock market before getting involved with it. This includes: what a stock is, why prices of stocks rise and fall, and the best ways to make money with the stock market.
The first thing that is necessary to know before getting involved in the stock market is what exactly a stock is. Simply, a stock is part ownership of a corporation (“How Does the Stock Market Work?”). When someone buys a stock on Wall Street, they are buying a share in a company. This …show more content…

Prices rise and fall based on supply and demand for that stock. The more people that want that stock, the higher the price will be. Supply and demand could change for a number of reasons. As mentioned before, one reason the value of a stock could rise or fall is based on whether the company succeeds of fails. If a company’s revenue suddenly plummets, then the value of that company’s stocks will plummet as well. Another way a stock could rise or fall in value is if the company is taken over by another corporation. The value of the holding company determines whether the prices go up or down (“How Does the Stock Market Work?”). Finally, stock prices can change based on current events. Much of what caused the Great Depression in the 1920’s was the economic policies of the time “including tariffs and reparations, decreased the international market for American goods, contributing to economic woes in the U.S. In addition, the nation's productive capacity was greater than its capacity to consume” (Paulson 262). This is just a single example of how current events have greatly effected the fluctuation of the stock

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