What is the Stock Market

  Lately, the world of investment in Indonesia is experiencing a fairly rapid development. Economic conditions that are constrained by pandemics, and the many reviews about investment in various cyberspace provoke many people to jump into the world. In fact, until the last quarter of 2020, the number of investors in the country increased by 56 percent.

Unfortunately, some new investors only invest because of the fear of missing out. As a result, they plunge into the world of investment without having enough knowledge so that the return obtained becomes not maximal. Indeed, the existence of mutual fund investment products makes many people able to invest without the need to do fundamental analysis or technical analysis. 

Even so, it still takes some basic knowledge about investing so that it is not like walking with a close eye. One of the things that an investor should know is the stock market. In short, the notion of the stock market is where investors can connect and conduct stock trading transactions owned by public companies.

Understanding what the stock market is is becoming the most fundamental science in the world of investing. For this reason, the following explanation can help you understand it.

Understanding the Stock Market and The Basis of Understanding That Must Be Known

As an investor, you must first understand what the stock market understands. The stock market is a place where investors can connect to transact and trade shares from companies that have gone public. Stock trading activities can be done from inside the stock exchange or from outside the stock exchange.

As with financial activities in general, trading and transaction activities in the stock market are regulated by regulations determined by the Government. Reference to the regulation of activities in the stock market one of them is Law No. 8 of 1995 concerning the Capital Market. This law contains about the rules and also the provisions of capital market activities. 

What is the difference between the stock market and the stock exchange?

Although already know the basic understanding, not a few people who still misunderstand what the stock market is. Some people even assume that the stock market and stock exchanges, such as, IDX or Indonesia Stock Exchange, are the same thing. In fact, if understood properly, the stock market is one part of the stock exchange.

What is meant by the stock exchange itself is the organizer and provider of the system and the means to bring together selling offers and also buy securities from many other parties. The goal is none other than to trade securities between those parties. 

Meanwhile, the effect is securities. These securities include commercial securities, debt recognition, bonds, stocks, debt proof marks, futures contracts on securities, collective investment participation units, to each derivative of securities.

In other words, on the stock exchange, investors can not only buy or sell shares. Instead, investors can also sell or buy bonds or securities. Through the stock exchange, investors are also able to get information related to the supply and demand of a particular stock.

See Stock Price Indexes to Understand the Stock Market

For those of you who have jumped into the world of investment must understand if the stock price always fluctuates and moves erratically. Sometimes, the price per share can go up, but, other times, the price per share goes back down. And vice versa.

Changes or fluctuations in stock prices are reflected in a stock price index. What is meant by a stock price index is a measure or indicator to measure changes in the price of a stock market or part of the market. 

When the index moves up, it means that the majority of stocks included in the index also move up.Conversely, when the stock price index decreases, it means that most stock prices on the index also move down. 

Terms of Trading in the Stock Market

In the stock market, the term trading is also known in addition to stock investment. If stock investing is a long-term activity, trading these stocks has a short-term nature. Instead of investors, these stock traders are known as traders.

Stock trading is practiced with the aim of making the best possible profit in the shortest possible period of time. Some traders trade stocks actively over a daily period of time. Others buy shares actively, hold them for a month, then resell them.

Unlike investors, traders are more concerned with technical analysis than fundamental analysis. The reason is because a number of technical indicators, such as moving averages and stochastic are needed to make a decision when the right time to buy a stock or sell it. Some information from securities companies, such as stock research, analysis reports, to charting tools is also needed in this trading decision making.

Always Look for Information Other Than the Stock Market for The Guarantee of Investment Success

That's a quick glance at information about what the stock market is that all investors must know. In addition, there is still a lot of information and other knowledge about investments that you need to find out, especially about the theory and practice. That way, the chances of success from investing are higher you get.