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The benefits and negatives of the stock exchange

The stock exchange or stock market is a market that collects, issues, and trades stocks, bonds and other securities, which gives companies the ability to support their capital by giving investors part of their ownership. The stock exchange is defined as the markets that include exchanges of securities within A specific region or country, and it depends on the existence of a value or price for the shares traded in it, and other definitions of the stock exchange are the activity that depends on buying and selling shares within a specific general level for their prices every day.


Stock market characteristics:

 The stock market is characterized by a set of characteristics: Which:

Returns and risks:

It is one of the basic characteristics of the stock market. Assets, such as stocks, are characterized by a high degree of risk, and are affected by the special changes in the economic environment and the nature of the competition between companies over the percentage of sales and profits, which help determine the prices of these shares.


Changes:
 They are the fluctuations that occur in the financial markets, and appear as a result of changes in prices associated with a set of events, such as government economic reports and company profits. Therefore, successful investors in the financial markets are keen to hedge against changes and fluctuations. And that is through the diversification of investments within their investment portfolios.


Liquidity:

It is intended to provide the stock market for margins that clarify the differences between buyers and sellers of securities by encouraging these markets to bring together firms and companies from all over the world. Information technology has also contributed to enhancing and supporting private trading in the financial markets. By disseminating financial information to investors and participants in these markets.


 Globalism:

Where it is considered one of the characteristics and characteristics of the stock markets; And to bring all European, American and Asian companies together, which contributes to encouraging individual and institutional investors to use the electronic networks available around the clock in the application of trading operations.


Organization:

Among the most basic characteristics of financial markets are; As it relies on the existence of laws that work to regulate it, and it ensures that all investors have access to private information in the investment process at times that are convenient for them.


The importance of the stock market:

Where the stock market is an important market in the economic sector, and its importance is summarized according to the following points:

Economic Indicator:

Where that is, the stock market is used as an indicator to measure the economic condition of countries, and it also helps to reflect all changes, and to clarify stock prices in terms of rise or fall, which indicates boom or depression in the economic situation.



Setting prices for securities:

 Helping to provide values ​​for securities that depend on the effect of supply and demand, and this contributes to assessing the nature of demand for these securities, which is considered one of the important benefits for investors. It helps to know the value of investments.


 Ensure the integrity of financial transactions:

It is considered one of the important things that these markets apply, and depends on observing the safety of companies and their ability to apply regulations and rules while dealing with the stock exchange.


 Participation in economic growth:

As the stock markets have the ability to invest, through the exchange of securities between different companies, which leads to building capital and contributing to economic development.


 Encouraging saving and investment:

This is done by providing investment offers for most securities, which contributes to attracting many individuals to save in order to invest in securities offered through companies, instead of applying investments in assets that do not achieve any financial returns, such as gold.



Cons of investing in the stock exchange:

 Investing in the stock market sometimes leads to the emergence of a set of negatives, and the following information about them:

 Loss of entire investment:

As it is possible for the investor to lose his entire investment if the company loses and its share price drops, and the rest of the investors decide to sell their shares, which leads to the loss of all the initial investment for each investor, and as a result of this the loss of all money in the saving or stock category.


The need for a lot of time:

This requires investing in the stock market for a long time in order to choose between enterprises, and to determine the extent of each of them’s ability to make profits By following up the annual reports, financial statements, and special developments in companies, in order to obtain the best investment price for participation in the stock market.


 The emergence of fluctuations in stock prices:

Where the stock exchange faces a marked variation in the prices of stocks and all other securities, which leads to influencing individuals' decisions to buy and sell.


 Competition Emergence:

New investors face competition with professional investors and traders, or experienced traders who have the time to invest, unlike individual investors who need to know how to acquire this advantage.

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