Here is my latest article from the newsletter I am collaborating to:

Most of us have heard not just once about Wall Street or the Lords of World’s economy. Some of us know about Occupy Wall Street movement too!!

But what do we know about financial markets, stock exchanges, traded values, Forex, Metals Markets and so on?

If you ever wondered what a stock, a ticker or even a traded volume is, then read below.

First of all let’s state a friendly definition of a Financial Market: it is a virtual place (an intermediary) where companies list own shares or other goods at different prices and buyers (individuals or firms) come and acquire a part or that certain entire traded asset.  The role of the market is to ensure that the ratio between supply and request is fair.

Let’s take for example: Bank of America Corporation. This particular legal entity is listed on NYSE (New York Stock Exchange). Listed means it has shares traded over NYSE. NYSE is one of the largest and most important markets of all.

How does a company become listed and why would it do such a thing? First of all not all legal entities are eligible for listing. One of the most important grounds is the way it was organized: it must be incorporated as company with shares (there are several other forms of organization such as partnerships) and the second most important aspect is the size of the entity: the overall profit per year must be over a certain amount (each markets sets a different sum) in order to qualify for listing. The reason is that the listing brings investors therefore profit, more money! Another reason is the free trade, the independence of enterprise and so on.

When listed, entities receive a code (made up of numbers or letters, depending on the country in which it resides and trades). The code does not have an upper limit of characters; it varies from 3 to 7, even more. This code bears the name of Ticker; also referred to as Symbol.

When starting to trade the listed entity must obey certain rules set up by the specific market: one of the most important rules is “always list all documents to the market too”. For example: if the listed entity decides to change a Director, this might affect potential investors. Therefore this change must also be noticed on the market, so that it can be seen by all market participants.

Now, let’s step back and imagine ourselves as investors. We have all the money we need and we need to invest in something and get profit. How do we do that? Well, we buy stuff off the market! We can invest in companies and make them profitable thus making more money for us. By investing in a company, we are entitled to a quota of the company’s dividends (which means more money!). If we invest a bigger amount and we buy a bigger part of the company, we can end up owning that company! GREAT!