The information you are reading is an extensive tutorial on becoming a failed trader and unhappy individual using the stock market as an instrument. Experienced traders wrote this book with vast experience in losing capital through stock trading.
Most of the time, these scenarios are appropriate for micro investors who entered the market for stocks without advanced analytics or strategies.
Rule 1: Jump into the stock market based on excitement. What is that? Just after COVID (do you remember the last time you heard about it?) Many people, including your colleagues and friends, talked about their incredible earnings from stock trading. Any stock they purchased in the following weeks or days could sell the stock and earn profits. You’ve probably been through these tales too. After that, you’ve probably wondered if there is a reason why you are not yet in the market and why you are no longer a professional trader. This scenario is straightforward: You invest your first $100 and suppose you’re fortunate enough to earn a $20-30 gain. It is logical to ask if by investing 10k, I’ll earn 2-3k easily completed – you have deposited 10K. However, something went off the rails…
1.New York Stock Exchange (NYSE), USA
NASDAQ is the second largest stock exchange at 151 West, 42nd Street, New York City. This was the very first Exchange electronically traded, created in 1971. There are over 3000 companies listed with an average volume of trading of $1.26 per month.
The NASDAQ exchange is home to large tech companies that contribute to 9% of the total market value of the World. But, no companies are listed in the gas, oil or utility sectors. The focus is on the health and technology, and consumer service sector. A few of the biggest companies are Microsoft, Google, Facebook, Amazon, Tesla, and Apple, among others.
Common indices listed on the NASDAQ exchange include NASDAQ Composite Index, NASDAQ 100 and NASDAQ Non-Financial.
2.National Association of Securities Dealers Automated Quotations (NASDAQ), USA
NASDAQ is the second largest stock exchange at 151 West, 42nd Street, New York City. This was the very first Exchange electronically traded, created in 1971. There are over 3000 companies listed with an average volume of trading of $1.26 per month.
The NASDAQ exchange is home to large tech companies that contribute to 9% of the total market value of the World. But, no companies are listed in the gas, oil or utility sectors. The focus is on the health and technology, and consumer service sector. A few of the biggest companies are Microsoft, Google, Facebook, Amazon, Tesla, and Apple, among others.
Common indices listed on the NASDAQ exchange include NASDAQ Composite Index, NASDAQ 100 and NASDAQ Non-Financial.
Please read our article about how to invest in Nasdaq in India.
3.Shanghai Stock Exchange (SSE), China
Shanghai Stock Exchange (SSE) is the third-largest Exchange for stocks worldwide and the largest in Asia and is located in Shanghai, China. The Exchange was founded in the year 1866. But, it was suspended in 1949 due to the Chinese Revolution. It then laid the modern foundations to reestablish itself in the year 1990.
Every share on SSE comprises Class A shares priced in the local Yuan currency and Class B’ shares quoted in US dollars. Class A shares are intended for use in domestic markets and only for those who meet the scheme’s requirements for foreign investments. However, Class B shares are open to both national and foreign investors.
The SSE comprises its SSE Composite Index and all the stocks listed on the Exchange. Other indexes comprise SSE 50 Index and SSE 180 Index. Some of the biggest companies traded on this Exchange are PetroChina, the Industrial and Commercial Bank of China, and the Agriculture Bank of China.
4.European New Exchange Technology (EURONEXT), Europe
Also, it manages exchanges in Amsterdam, London, Paris, Lisbon, Brussels, Dublin, Milan, and Oslo. Its name refers to it as the European stock exchange, and it is regarded as the top stock exchange in Europe. Furthermore, Euronext has over 1300 listed companies with a global market capitalization of $6.65 trillion.
Additionally, French companies make up the majority of this index. Other indices comprise the AEX-INDEX (Netherlands businesses), BEL 20 (Belgium), FTSE MIB (Italy), along with OBX 25 (Norway). The largest companies on the Exchange include Procter & Gamble, LVMH, Royal Dutch Shell, Merck & Co., and L’Oreal.
5.Hong Kong Stock Exchange (HKEX), Hong Kong
Hong Kong Stock Exchange was created in 1891. It’s the third-largest trading platform in Asia. It is considered the most important financial hub in the World. It also has more than 2200 firms, and 50% come from China.
The primary index is the Hang Seng Index, a free-float, an adjusted-MCap-weighted index comprising 50 stocks and forms about 58% of the total HKEX’s MCap. It is home to some of the most important corporations in the World, such as PetroChina, China Mobile, HSBC Holdings, AIA, Bank of China and many more.
Large companies, too, can sell for lower than HK$4 per share on HKEX. Stocks classified as penny are only classified when the price is less than HK$0.5.
6.Tokyo Stock Exchange (TSE), Japan
Tokyo Stock Exchange Tokyo Stock Exchange is called Tosho and is located in Tokyo, Japan. It was created in the year 1898. Following World War II, TSE was shut down for four years but resumed its operations in 1949.
Certain Japanese conglomerates include Honda, Toyota, Sony, Suzuki, etc. All household names around the World.
In addition, TSE has two sections that comprise big companies, and the second includes small-cap businesses. Furthermore, TSE is best known for its market surveillance and compliance mechanisms.
7.Shenzhen Stock Exchange (SZSE), China
Shenzhen Stock Exchange is oriented in Shenzhen, popularly referred to by Silicon Valley of China. Additionally, it’s an independently-operating stock exchange based in China, followed by Shanghai Stock Exchange and Beijing Stock Exchange.
Most companies are located in China and operate using their Yuan currency. It also provides an exchange platform allowing two shares, i.e. A shares trading locally in currency and B shares trading in US dollars to foreign investors.
The most common indexes available on the Exchange include the SZSE Component Index, which comprises 500 stocks, and the SZSE 100, which includes the 100 most prominent companies listed on the Exchange. Although SZSE is a self-regulatory body, China Securities Regulatory Commission (CSRC) can be a source of regulation in volatile periods. In particular, they could suspend trading for a day in the event of negative news or events that affect markets.
8.London Stock Exchange (LSE), United Kingdom
- It was first set in the year 1801 when it was first established. It’s owned and managed by the London Stock Exchange Group. It was the first company to establish European benchmark prices and market and equity-market liquidity information. The LSE has around 3000 companies registered on the LSE, with a total value of $4.13 trillion.
The other indexes comprise FTSE 250, FTSE 350, and the FTSE All-Share index. In addition, LSE has two markets, i.e. the primary market, which includes more than 300 large businesses from around the globe. Another is an alternative market, the Alternative Investment Market, an international market that caters to small-cap businesses. The most notable British firms listed on the LSE include Barclays, British Petroleum and GlaxoSmithKline.
9.Toronto Stock Exchange (TSX), Canada
Toronto Stock Exchange is a fully owned part of the financial service firm of TMX Group. The company was founded in 1861 in Toronto, Ontario, Canada.
The instruments used to trade on the Exchange are Exchange-traded funds (ETFs), equities, bonds, futures and options, investment trusts, commodities, and investment trusts. Additionally, TSX focuses more towards the mining, oil and gas businesses.
The 100 top corporations can also be analyzed with the TSX Composite Index, responsible for around 70% of the Toronto Stock Exchange market capitalization. The Royal Bank of Canada, Suncor Energy, and Fortis are top companies.
10.Bombay Stock Exchange (BSE), India
Bombay Stock Exchange is among the oldest exchanges of stock located in Asia, established in 1875 under British rule. BSE is the biggest market in India that is situated on Dalal Street, Bombay.
BSE is the largest amount of listed companies, greater than 5500. However, the majority of companies are smaller-sized. Additionally, BSE has helped to expand the financial markets of companies and the corporate sector. BSE’s total market capitalization BSE totals $3.5 trillion.
The principal index of the Exchange, S&P BSE SENSEX, is India’s most closely followed index. “Sensex” is the abbreviation for sensitive index, and it includes 30 shares representing different segments that make up the Indian economy.
What’s the way Stock Markets Work?
To comprehend the functioning of the market for stocks, it is essential to comprehend all the parties involved in its activities.
In general, there are three people involved in the procedure: buyers, or those looking to purchase shares as a whole or in bulk blocks, sellers looking to sell their shares, either at either a loss or profit (as it may happen) as well as market makers, or intermediaries accountable for connecting buyers to sellers, and in turn, vice versa.
All interactions between these three players are subject to a complex rulebook essential to ensure peace and fairness within the market.
Other market players affect trading or assist in facilitating trades by verifying the validity of transactions.
Broker-dealers, for example, are charged by sellers and buyers offering capital and performing transactions.
Analysts and investment advisers influence purchase and sale decisions by regularly releasing reports on a company’s prospects after studying the financial statements.
The number of market makers varies based on the current stock market.
In this case, NYSE is an auction-driven market where Designated Market Makers (DMM) and experts are accountable for offering liquidity to hundreds of security at once.
Contrary to that, NASDAQ has a broker-dealers system that competes in providing market-making services concerning particular security.
Each security of NASDAQ reports to have 14 market makers for security.
How are Stocks traded?
The basic mathematics of the stock market is the gap between asking and bid prices. Once a stock has been traded on an exchange, the market forces will take over.
The stock can be traded many times throughout the day. Investors may purchase the shares and bid on them at a lower cost. Some traders also sell it or demand it for a premium cost.
The difference in the sale and purchase price is called an auction spread. The spread is crucial because of several factors.
It is an important source of income for market makers, who earn profits from the difference between the prices.
The second is that it indicates liquidity and attention to the company. The smaller the spread, the more liquid it is, which signifies that investors are keen on buying or trading the stock.
Liquid stocks are generally more resistant to extreme price swings due to the larger number of traders making their market.
However, the shares that aren’t liquid are more likely to show dramatic increases or declines in value since a single major deal could bring investors into the firm or force them to leave the company.
What exactly is what is a Stock Exchange?
A Stock Exchange is an institution that provides designed markets that deal in commodities, derivatives and securities and various financial equipment. It’s among the essential elements in the market for financial instruments. In this market, sellers and buyers join forces to complete transactions. Securities are purchased and then sold according to clearly defined laws and guidelines.
Stock exchange provides the necessary structure and edifice to exchange members and their brokers dealing with different asset classes. It also oversees transaction actions to ensure fair and free trading.
The best part is that stock exchanges can also be considered the financial measures in an economy where industrial growth and firmness are reflected within the index. We will now examine the biggest Stock Exchanges around the world!
Bottom Line
The valuation of the stock exchange keeps fluctuating. However, the top five exchanges always remain within proximity. The earnings of the exchanges are recovering from the COVID pandemic. Investors should understand the situation before investing in any global company. There is, however, a lot of expectation for Asian stocks to rise and rise to a higher standard.