Investors who buy shares actually buy a portion of the company. Shares provide certain rights to the owners but they have no obligation if the company defaults or faces a lawsuit. The stock may become worthless in a worst scenario, and that is the limit to the investor's liability. Companies issue shares to raise capital. Their cash requirements may be to meet the demands of the expansion programs or to acquire new properties. The new shares are issued at par value or at a premium depending upon the financial strength of the company. Thereafter, the trends in the market play their part and the share value increases or decreases accordingly.

Investors buy shares because of their belief that the company will grow and the value of their shares will rise accordingly. In buying the shares of a newly floated company, an element of risk is involved but the chances of great gains are there. The trading is done on share markets like New York Stock Exchange (NYSE) or NASDAQ (National Association of Securities Dealers Automated Quotation System). For doing trade, the company needs to be listed in the exchange. Generally, the investor engages the services of a broker to do the trade. Each broker receives a commission on the sale, as per the rates agreed upon between him and the client.

It is universally accepted that shares have many advantages over other forms of savings. A shareholder has the rights to participate in major decisions of the company management. Every share represents one vote. The shareholder is part of the profits or the losses of the company. Profits are distributed in the form of dividends. The downside is, if the company does poorly, share value will decrease and the dividends may be skipped.

The important stock exchanges of the world are located in Japan (Tokyo Stock Exchange), India (Mumbai Stock Exchange), Europe (London Stock Exchange, Frankfurt Stock Exchange, and SWX Swiss Exchange), the People's Republic of China (Shanghai Stock Exchange) and the United States. The major exchanges in the US are the NYSE, NASDAQ, and Amex.

Generally, share trading and economy of a country are closely interrelated. When the economic conditions are good, the market is bullish. High economic production, low inflation and low unemployment are the indictors of bullish conditions in the market. When inflation and unemployment rise, bear market is round the corner. The intelligent investors track various economic indices and share market trends to safeguard the investments.

The next important issue about share trading is the investor's psychology and fluctuations that occur in share prices due to demand and supply. Investors rush for buying particular shares, when they see price is rising. A falling price may have the adverse effect and the investors rush to sell. To determine whether such fluctuations are short term, careful analysis of the trading trends and the related information is necessary.

Both long term and short term strategies are popular but it depends on the financial objective, of the investor. But you need to adopt a stock trading system to maximize profits and keep the investments safe.

Expertise is possible through experience in trading. To sieve the essential from the voluminous literature relating to stocks is not the easiest of the jobs. For a beginner, it is not only desirable but absolutely essential to avail the services of a broker or a financial consultant. Different types of strategies demand special study. A broker has better stock trading information and he is in a position to advise you taking into consideration the size of your investment. His advice will be invaluable to make proper decisions and prevent losses.