After a few hours from the launch of the blog stock market for beginners I got a lot of queries from my friend. They want an answer for the question how does the stock market work? If we go on describing the subject it will take years to complete. But I am trying here to explain this question at its bare basic.
How does the stock market work?
Suppose a business house go on debt or they want to diversify, they need a lot of 
money. So they collect money from the public. This is possible by selling stocks or shares of their company. So the company divide its value into shares. Suppose they worth a million dollars then they divide each share that worth 1 dollar each. Now they sell the shares at an appropriate value mostly higher than that they hold. Suppose if they manage to sell their shares for US $ 10.00 then they heap a huge money and the company became richer by 10 times.
What is happening at Stock Exchange?
Several companies sell shares and now almost all firms have issued shares. The shares like the above will be listed at stock exchange and public sell it or buy it at an appropriate price they think suitable. As the company make more profit the shares will became more valuable and if the company go for a loss then the shares become cheaper.
How you can make profit from Stock Exchange?
The share or stock prices are varying everyday or in fact every second. Buying at a cheap rate and selling at a larger rate will make profit for the investors. This simple business is happening here also.
I know this answer is so simple that you cannot digest it. But this is the simplest things that is the basics of stock market.
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