Knowing About Stock in Online Trading

Stock is one of the most popular financial markets. Issuing of stock is one option the company wants to raise the company. On the other hand, the stock is an investment instrument that has been chosen because it shares the investor is able to provide an attractive rate of return.

Stock can be defined as a sign of ownership of a person or party (business entity) in a corporation or limited liability company. By including the capital, then that party has a claim on corporate earnings, a claim on corporate assets, and is entitled to attend the General Meeting of Shareholders (GMS).

Basically, there are two benefits of investors with a buy or hold stock:

  • Dividend
Dividend is a distribution of profits derived by the company and the profits generated from the company. Dividend provided after the approval of shareholders in the GMS. If an investor wants to get the dividend, the investor must hold the shares in a relatively long period, namely until the ownership of these shares are recognized as a period in which shareholders are entitled to a dividend.

Dividends distributed by companies can be either a cash dividend - that is given to shareholders on the dividend in cash in a certain amount of dollars for each share - or can also be a means of stock dividends to shareholders on the dividend given number of shares so that the number of shares owned by an investor will increase with the stock dividend.
  • Capital Gain
Capital Gain is the difference between purchase price and sale price. Capital gains made by the stock trading activity in the secondary market. For example, investors buy shares of ABC at a price of Rp 3,000 per share and then sell it at a price of Rp 3,500 per share, which means that investors get a capital gain of Rp 500 for each share sold.

As an instrument of investment, the stock has risks, among others:
  • Capital Loss
Is the inverse of Capital Gains, which is a condition in which the investor sells the shares is lower than the purchase price. For example, shares of PT. Buy XYZ at a price of Rp 2,000 per share, then the share price continued to decline until it reaches Rp 1,400 per share.

For fear that stock prices will continue to fall, investors sell at the price of Rp 1,400 is thus a loss of Rp 600 per share.
  • Liquidation risk
Owned company, was declared bankrupt by a court, or the company is dissolved. In this case the claims of shareholders' rights get last priority after all liabilities to be paid (from the sale of company).

If there is still remaining from the sale of the company's property, then the remainder is distributed proportionally to all shareholders. But if there are no residual property company, the shareholders will not gain from the liquidation. This condition is a risk that the heaviest of the shareholders. For that a shareholder is required to continuously follow the development of the company.

In the secondary market or in activities of daily stock trading, stock prices fluctuate either increase or decrease. The formation of stock prices is due to supply and demand for these shares. In other words, stock prices formed by supply and demand for these shares.

Supply and demand is due to many factors, both of which are specific for these shares (the performance of companies and industries where the company is moving) and the nature of macro factors such as interest rates, inflation, exchange rate and non-economic factors such as social conditions and politics, and other factors.

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