Equity trading is the process of sale and purchase of shares in a company. Investors sell and purchase these shares in stock exchanges such as the NSE and BSE in India or the NYSE and LSE across the world. You become an owner of the company when you purchase a share. Equity trading enables investors to profit from price appreciation and dividend income. It is an easy method through which individuals accumulate wealth over a period of time.
How Equity Trading Works
Equity trading happens through the stock exchange market. Here buyers and sellers can trade company shares. Investors can purchase shares when they feel the price will rise and they can sell their shares when they feel they want to make a profit. These trades are usually made through brokers or through online platforms. Companies also sell shares in order to raise money for their business and investors can purchase them during an IPO, that is, Initial Public Offering.
Benefits of Equity Trading
These are some advantages of trading equity:
- Space for High Return – Stock prices may rise, and one can earn a profit.
- Ownership in Businesses – Purchasing shares amounts to owning part of a business and reaping the rewards of its success.
- Dividend Income – Some firms distribute a portion of their profits to their shareholders, providing additional income.
- Liquidity – The shares are very easy to buy and sell in the stock market.
- Diversification – Shares in various companies can be purchased by investors for risk reduction.
Conclusion
Equity trading is a very simple and effective way to invest and grow your wealth. By buying and selling shares investors and traders can earn profits and also receive dividends. It also allows investors to become part-owners of a successful company.