For centuries stocks have been the top choice for people interested in making an investment with the potential of a high return. In efforts to raise capital for future planning and upcoming projects, companies issues stocks. Each stock that is purchased represents partial ownership to the stock holder and company. As a company succeeds in business, the price of the stock increase which yields a profit for the investors. It is a common practice for a company to issue dividends or a percentage of the profits to their share holders.
Brokers work with investors to help clients make the best decisions for buying and selling stocks. Stocks are exchanged or traded on the National Association of Securities Dealers Automated Quotation System (NASDAQ) and New York Stock Exchange (NYSE). Large companies are known to invest on multiple stock exchanges, but many will only choose to be traded on one.
For decades stocks were viewed as a long-term investment. Successful companies will continue to increase in stock profits over the years. This means that a stock that was invested in for a few dollars can be worth substantially more in the future. Blue Chip stocks is the term for those stocks that have continued to be successful over the years. First time investors usually choose blue chip stocks as the support system of an investment portfolio. With advancements in the internet more people are choosing to invest in short term trading techniques. Brokers tend to charge more commission when clients use short term trading.
FOREX, formally known as The Foreign Exchange Market, operates differently than the stock exchange. FOREX is considered to be better for short term investments. The majority of transactions are completed within a 24 hour period. FOREX trades are free from commission which allows for more trades to be made in one day. Instead, brokers are able to earn money by being financial advisors and counseling clients on the best time to sell or buy stocks.
At this time, FOREX is the world’s largest financial market. Every day it manages transactions of 1.5 trillion dollars. The American stock exchanges only handle around 100-billion dollars in transactions each day. FOREX trading markets exist all around the world and operate 24 hours per day, five days per week. Trading starts in Australia every Monday morning.
Stock exchanges are limited by the hours of operation they hold. FOREX operates around the clock until the end of Friday each week. FOREX is more predictable for trading than stocks, which helps make it more desirable to investors. Trends of the FOREX are based on market trends that have been followed for the years.