What Is Share Trading All About And What Happens With It?

Share trading refers to the buying and selling of the stock of a publicly listed company. Shareholders can sell their stock in the stock market to people who are willing to purchase them. There are a number of reasons why somebody would be wiling to sell shares to somebody else. The two most common reasons are capital gains and dividends.

A capital gain is the gain made when a share is sold at a profit. E.g. B purchases a share of X company for $100. It appreciates at a rate of 10% p.a. At the end of one year B sells the share to C for $110. B has made a profit of $10. X company announced a dividend of $1 per share during the year that B held the share. B has made a total profit of $11 by holding onto the share for a year.

C purchases the stock from B because C thinks that either the stock will appreciate or the company will announce a dividend.

The selling and buying of shares in any format whether physical or online is known as share trading. When an individual wants to buy or sell his shares he puts them up for trading.

Shares can be sold via agents or through online trade methods, to trade via the online method you will need to open an account with a bank which supports online trade. In finance a share basically is a unit of account for a variety of financial instruments which comprise of stocks, mutual funds, limited partnership and REIT's.

In British English, the application of the term share alone to address exclusively to stocks is so widespread that is often replaces the term stock itself. A share on the whole is a finite number of equal portions in the capital of a company, giving the right to the owner to a proportion of distributed, non-reinvested proceeds which are known as dividends.