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A stock market, equity index, or shared market is an aggregate grouping of buyers and issuers of shares, representing ownership interests in companies; these might include publicly traded securities registered on a securities exchange such as the New York Stock Exchange (NYSE) or the NASDAQ. A company’s stock is usually listed on one or more exchanges. The price of that company’s stock is determined by supply and demand among investors and how it affects the value of the company. There are two forms of trading: active and passive. Active trading is what most people know of as “traditional” or “broker-endorsed” trading, while passive trading is what mutual funds, exchange traded funds (ETFs), and other trading vehicles are made out of.

How can you buy and sell stocks? Most investors start out buying stocks from mutual funds or ETFs; through their brokerage accounts. Investing in mutual funds allows you to diversify your portfolio, and since ETFs and mutual funds trade in the same manner as stocks, they often make the process of buying and selling stocks similar to that of your broker. Another advantage of investing in ETFs and mutual funds through your brokerage account is that you can sometimes use them to “trades” stocks that you have purchased so that you can get the full benefit of the gains without the worry of potentially losing all of your investment. This process is called an “out of the box” transaction.

If you want to invest in more actively managed stock exchanges, such as the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE), you will need to use a broker. You can still invest through your own brokerage account, but since you will be dealing with an experienced professional who works with ETFs, mutual funds, and other popular investments, you may be paying fees for the service. Some brokers are less expensive, however, and some offer free services or discounted fees for stocks that you purchase directly through them. Also, as with any investment, if you choose the wrong stock, it’s likely that you’ll have to pay a commission anyway – even if you’ve only paid a minimal amount. (The fees may also depend on whether you’ve traded the stock through your own brokerage or through a discount broker.)

Most investors find it easiest to keep their portfolios simple by owning just one type of index fund, either an EFT or a mutual fund. Index funds generally follow the same rules as traditional individual stock market investment vehicles; they are typically made up of “securities.” An index fund’s definition may include any of the following: a guaranteed issue (a government bond or other municipal bond issued by a local or national government); a well-known equity, like company stock issued by an international business concern; or an asset-based product (for instance, gold), where the security itself is worth more than the actual securities that comprise the portfolio.

Some investors prefer to own several types of individual stocks and bond funds; however, most would agree that it is simply too much work to track and evaluate them all on a regular basis. Also, since individual stocks and bonds generally don’t follow very strict investment rules, investors must rely on their own ability to “read” the marketplace and make investment decisions independently. For many people, this is extremely difficult; especially if they are used to relying upon professional financial advisors to guide them. By keeping all of their investments in a single index fund, they can concentrate on analyzing the movement of one particular asset, and feel assured that all of their money is being well managed.

Finally, many investors have become accustomed to the rapid increase of the price of various commodities and assets. In virtually every industry, there are a wide range of prices that are constantly changing, and it is easy for an investor to lose track of where they should set their investment money if they are investing in many different markets. To avoid this problem, many investors find that it is often easier to buy individual stocks and bonds in different sectors. This allows them to keep their portfolio relatively simple and yet still take advantage of the opportunity to make additional profits by diversifying. This strategy is also helpful if an investor wants to minimize their risk, as buying and selling stock is not as high-risk as buying and selling currencies or commodities.