What is Stock Exchange?
A stock exchange is a marketplace where public limited companies’ stocks and other securities are bought and sold. It’s a platform that facilitates securities trade between buyers and sellers. In other words, Stock Exchange is a market where an investor can buy or sell shares of publicly traded companies. Pakistan Stock Exchange (PSX) provides investors with an opportunity to invest in the country’s leading companies to grow their wealth. Pakistan Stock Exchange (PSX) provides a fully-automated trading platform that provides investors with a transparent and fair trading environment. Stock market and Stock Exchange, are both words that are used interchangeably.
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History of Stock Exchange
The history of the stock exchange dates back to the 16th century when some businessmen and investors started interacting in a small coffee house in London. These gatherings evolved into formalized and strictly regulated exchanges that are now called Stock markets. Stock exchanges worldwide are playing a vital role in the global economy by raising capital for companies. These highly regulated institutions now provide a centralized marketplace for investors to trade stocks.
How to get started with Pakistan Stock Exchange PSX?
To start with the Pakistan Stock Exchange, you must open an Account with a PSX-registered broker. The broker will act as an intermediary between you and Pakistan Stock Exchange, i.e., executing the trades on your behalf. To open an account, you must provide basic documentation for your personal and financial information.
How does the Pakistan Stock Exchange function?
Whenever a company decides to become a public limited, it gets registered in the Pakistan Stock Exchange PSX and issues shares in the market, these shares can then be bought and sold by any investor registered in the Pakistan Stock Exchange PSX.
What determines the price of the stock?
Just as in any market, the price of any item depends upon supply and demand. The more the demand for a product is, the more the price will be. Similarly, the lower price of a product is due to lower demand. However, this is not a single factor that influences the price of a stock in a stock market. The price of a share is also influenced by other factors such as geopolitics, overall economic indicators and company-specific news play significant roles in the price. The data portal PSX provides the prices of the shares.
The complete details of the documents can be found on this page.
Once you have opened an account, you can then fund your account and start trading in PSX. Before you start trading, it’s essential to do your research and understand the market’s dynamics. You should analyze the companies and sectors you are investing in. You must also keep up-to-date with the latest market news and trends.
General Psychology in a Financial Market
The following cheat sheet shows the emotions of the stock traders or investors in a fun way. There are ups and downs in any financial market and the best investors are always those who invest when the market is undervalued.
Skills required for getting started with PSX?
You need to have an understanding of basic arithmetic to invest in the stock market. There is no requirement of high intellect for stock trading.
How to earn from a Stock exchange?
The earning in a stock market is similar to trading in any market. We buy things when the prices are low and sell them when the price gets high. In a stock market, the shares of companies are bought and sold. When you buy a share at a low price and sell it at a higher price, you get a profit from the increase in the price of the share. This is called capital gain but wait! In the Stock market, there are other ways to earn. There are Dividends, Bonus shares and Right Shares from which the investors can get money.
What is a dividend in PSX?
A dividend is the profit of a company that is shared periodically among the shareholders during the fiscal year. The amount of the dividend is not fixed, and it is decided by the company management in Board Meeting before the announcement. There is no obligation on the industry to announce dividends for the investors. To get a dividend you would need to consider the following dates: Dividend Declaration Date, Excluding Dividend Date (Ex-Dividend Date), and Payment Date. You can check these dates by using the PSX Data Portal.
- Declaration date refers to the date on which the board of directors of a company announces the dividend payment.
- Excluding Dividend date or Ex-date refers to the date before the record date. The investor is eligible for the dividend if he/she buys the share before this date. If shares are bought on this date or after the Ex-date, the investor will not be eligible for the dividend.
- Payment date refers to the date on which the amount of dividend is transferred to the investor’s bank account.
Trade settlement is a bit of a complex process which involves releasing and receiving shares from a CDC account, the Buyer’s and Seller’s brokers, Bank. For your ease, we have made a chart that shows the process flow of trade settlement in the Pakistan Stock Exchange.
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