A stock market is a place where shares of companies that are publicly owned can be bought and sold either Over-The-Counter (OTC) or through centralised exchanges. The equity market, as it is also known, has established itself as a free-market economy, in that it offers companies the ability to access capital in exchange for providing interested outside parties with a portion in the ownership of the company.

The stock market or equity market offers an opportunity for investors to increase their income without the high risk of entering their own businesses with high overheads and start-up costs. On the other hand, selling of stocks helps the companies themselves expand exponentially. When you purchase a company’s shares, it is generally associated with an increase in the company’s worth. Therefore, trading on the stock or equity markets can be a win-win for both investor and owner.

There is a risk, however small or large, depending on the amount of stock bought, that one can lose money in a trading environment. If the company a stocks trader holds loses value, then so does the trader. If he decides to sell his stocks when the value is lower, he will sell at a loss.