Speaking about the Russian stock market, one should, first of all, proceed from the fact that it is an integral part of both the country’s financial system and is firmly connected with the global capital market. The path that the domestic stock market has taken is quite interesting from the point of view of an outside researcher, but from the position of an investor or financier, everything was not so simple and clearly favorable.

To more fully understand the modern Russian securities market, we can start with the fact that after a more than 70-year break (after the October Revolution of 1917 and the collapse of the market economy of the Russian Empire), Russia had to practically re-create a system of market relations, starting from the formation of tax politics and ending. The first period of the formation of the securities market as such was marked by the emergence of check auctions, where the turnover of the privatization checks that appeared at that time took place on the general wave of privatization that was taking place at that time.

In addition, there was a great demand for trading platforms or exchanges (in the early 90s there were more than 700 of them throughout the country), where these quasi-securities could be exchanged for shares of newly emerging joint stock companies. Gradually, many types of securities (or considered as such) began to appear on the market: company shares, government bonds, bills (see), advice notes and even MMM tickets.

More than 20 years have passed since then, and in our time we can say that, despite all the costs and difficulties that accompanied the formation of the new Russian securities market, a stock market has been formed in Russia that fully meets the standards of the European level. In addition, there is a large sector of the over-the-counter market, where hundreds of types of securities of various qualities and purposes are traded.

The Russian securities market, or even, more broadly, the CIS countries, was formed in the image and likeness of the European one, where priority has always been given to large capital, servicing its areas of interest and strict regulation by the state. The American market is characterized, on the contrary, by priority of access for retail investors, small companies and funds, and self-regulation of the investment community.

This, in turn, determined that the basis of the Russian stock market and the securities market in general are government debt instruments and the presence of only two main stock exchanges - the Moscow RTS and the MICEX (in 2011, after their unification, there was only one exchange in Russia for the entire country under the new name "Mosbirzha").

Thus, today there are the following types of securities markets with their own characteristics and Russian specifics:

1. Russian market. This is the most capacious in terms of capitalization and the most popular among foreign investors. Consists of several main segments:

• government bonds. The most liquid type of instrument on the market, since obligations on these securities are guaranteed by the state, its entire budget, gold reserves and other holdings. The two most widely known types of such bonds are OFZ (federal loan bonds) and Eurobonds (for placement on global stock exchanges). The yield on these assets is very high (more than 10%), which actually attracts foreign creditors, who, in addition, may have an additional market “carry trade” premium.
• the second significant segment is the corporate bond market, for example, such as Gazprom, Sberbank or VTB. But their use is mainly limited within the country, and they are used mostly in the interbank lending market to support repo transactions
• debt instruments of regions and municipalities. The weakest segment of bonds. The main reason is the inability of most regions to conduct an independent budget policy, the weakness of the financial and economic security of debt (more than half of Russian regions are high-risk areas with budgets subsidized from the center and chronic debt). At one time, before the crisis of 2008-2009, for example, bonds of the Moscow government were in good demand, but now even there is no particular interest from investors in them.
• Russian mortgage securities market. The weakest segment of the Russian debt market. A good start in the early 2000s, which was due to the large-scale housing development that began in large cities of the country, quickly came to naught after 2009. The most prominent representatives of this type of market were, for example, bonds of AHML, SU-155 and other Moscow construction and mortgage organizations. Currently, the decline in activity in the construction market, which has been ongoing for more than a year, the fall in real estate prices and the general crisis mood have not yet contributed to the development of this type of debt.

1. Exchange-traded securities market. This segment is the second most important after debt and its total capitalization currently amounts to about $200 billion. (For comparison, the American NYSE is $5 trillion, the Tokyo Stock Exchange is $2.5 trillion). This market is represented by the following main segments:

• Share market – 253 issuer companies are listed on Mosbirzh. The average daily trading volume is about 5-10 billion rubles. The most liquid class includes shares of companies in the financial sector (Sberbank VTB), oil and gas sector (Gazprom, Surgutneftegaz, Bashneft, Transneft, Lukoil), industrial (Norilsk Nickel, MMK, Kamaz and others), telecommunications (MTS, Megafon). The list of companies most in demand by the market is small and amounts to no more than 20-30 issuing companies.
• Derivatives market (FORTS). A small part of the stock segment. But it is developing quite dynamically. The most liquid are futures contracts for Blue Chips, as well as index contracts for RTS, Si currency contract and others.

1. Over-the-counter securities market in Russia. This segment is more significant for the commercial and industrial sectors of the economy, since it uses securities designed to ensure the trading turnover of companies, more expanded liquidity of credit relations and investments. These include the following types of market segments:

• Bill market and other order securities
• Shares and bonds of companies that are not listed on the stock market
• Auction (pawnshop) securities market

In addition to this, it should be noted that the Russian market also has trading platforms where securities of foreign issuers are traded. So far, there is only one such trading platform in Russia - the St. Petersburg Stock Exchange. It carries out transactions with shares of such world-famous companies as Apple, Facebook, Coca-Cola, Bank of America and others.

Conclusion

As a result. In this article, an attempt was made to tell how the securities market is developing in Russia, what features and prospects it has. To put it bluntly, in order to become a full-fledged financial capital of a regional scale, much more will have to be done, and Russia is only at the beginning of this difficult but interesting path, and it seems that there is hope that everything will work out.

Business is a very exciting thing. This is what successful and richest entrepreneurs think: Bill Gates, Warren Buffett, Jeff Bezos, Mark Zuckerberg, etc. Their capital was formed not only thanks to brilliant ideas and commercial talent, but also due to the popularity of their shares on world exchanges. Moreover, if Microsoft or Facebook can be classified as a technology sector, Buffett’s fund did without them for a long time. Consequently, huge fortunes can come from different types of stocks.

Many consider activities in this complex and voluminous market to be the lot of a select few: the work requires an analytical mind, many years of experience, and professionalism. Others see securities as akin to chips in a casino, trying to profit from their fluctuations. Which view is most correct? Many of the Forbes billionaires' fortunes began with small investments, contracts and deals - perhaps only Soros achieved success using a speculative approach. The securities market is extremely diverse - but before we touch on individual types of assets, let's talk about the history and regulation of this market.

History and regulation of the securities market

The first exchanges were organized in London and Antwerp in the early 16th century to trade commercial bills and government debt obligations. The exchange was thus a place for transactions. In Russia, stock exchanges appeared in the 1830s and actively developed until the outbreak of the First World War, with the railway market acting as a catalyst in the 1860s. People felt the taste of “fast” money and began to speculate; according to the recollections of contemporaries, there was a rush around. In 1900, in St. Petersburg, at the commodity exchange, which had existed since 1701, a special department was created for trading currency and stock assets.

In the United States, the stock market has been operating since 1792 and is often the standard of comparison - it is on it that the maximum amount of information has been accumulated. In 1924, the first American one appeared, allowing you to invest directly in a pool of assets. In 1997, Russian mutual funds were created based on their model. In addition, since 1993, diversified instruments consisting of many shares or bonds traded on exchanges as one share have been circulating on the international market.

The modern International Federation of Exchanges has more than 50 trading platforms, where almost 40 thousand joint-stock companies and a huge number of qualified players are represented. The world's largest centralized exchanges are London, New York, Tokyo and Euronext.

The securities market in the state performs a number of important functions: investing borrowed funds in business, private savings, and activating entrepreneurship. This is an important component of the country’s stability, therefore in all modern states the regulation of the securities market is carried out very carefully.

Securities market regulation is a constantly changing process, adapting to the needs of society and ultimately aimed at the benefit of the investor. So, in May 1975, fixed commissions for Wall Street players were abolished, marking the beginning of price competition. Gradually, cheaper investment products appeared, and the threshold for entry into financial institutions decreased. The electronic form has replaced the paper one, allowing you to send copies of the originals to the other side of the world in a few seconds - today, with an amount of several thousand dollars, a private investor has the opportunity to buy assets around the world. In the United States, the securities market is regulated.

In Russia, the market for financial instruments was re-opened only in the early 1990s - the Law “On the Securities Market” of 1996 established the procedure for the work of all interested parties in the Russian Federation. He defined the interactions of the participants, incl. professional, when handling securities, the obligation of licensing and information openness, the role, opportunities for independent regulation of organizations. The regulation ensured the interests of all market participants, although in the early years it did not exclude a large number of manipulations.

Since the activities of the securities market are closely intertwined with the economy, its regulations are contained in a large number of legal documents of civil legislation related to the work of the banking and investment sectors and trading platforms.

Securities market participants and its structure

National law states that securities market participants are divided into issuers, investors and professional participants.

Organizations begin to sell securities when they need to replenish capital or want to raise money for a certain period. For example, to expand a business. Buyers are organizations and individuals who purchase securities in order to receive income and take part in the management of the joint-stock company.

The intermediary role is performed by licensed legal entities: brokers, dealers, management companies, depositories, register holders, clearing organizations. What exactly are they doing?

The broker executes transactions on behalf of the client. The dealer acts independently, and the forex dealer can cooperate with citizens in unorganized trading. Speculation with currencies does not relate to investing; the foreign exchange market is just a way to exchange one currency at the current rate for another at a more favorable rate than at the bank around the corner. However, just a few years ago, on the wave of interest in the unregulated foreign exchange market in Russia and the CIS, several large ones operated with a yield of about 10% per month.

Management companies manage the securities of their clients - the most common. The depository is intended to store securities, and the registry holder collects and stores information about their owners. Clearing organizations organize reporting of transactions.

On their sites, exchanges (self-regulatory organizations) organize trading of stock assets, i.e. the exchange cannot carry out transactions with securities on its own behalf and at the request of clients. In fact, today's exchange has the same basic functions as it did several centuries ago - it is an intermediary, a guarantor of a transaction between the parties. The largest exchange in Russia is . When a paper is initially put on the market, a procedure is carried out. After the security has been purchased by the first investor, he can sell it to another at the established price. The exchange of securities between investors without the intermediation of the issuer is called the secondary market. An analogy can be found in the real estate market, where primary real estate means a new apartment, and secondary real estate means a private owner.

If securities exist but are not listed on an exchange, they can be bought and sold using electronic trading systems. The range of assets is from shares of small factories for a few kopecks apiece to Eurobonds from 100,000 dollars or euros. The main problem of the over-the-counter market is low .

Banks occupy a special position in the securities market: they attract money and invest it, participate in investment operations (for example, list company shares on stock exchanges), and advise investors. At the same time, the consultation will always be beneficial for the bank, but not always for the other party. Under a special license, banks provide brokerage, dealer, depository, management and clearing services. Through monetary and credit operations, the Bank of Russia has played the role of the main institutional regulator of the market since 2013. It is important to note that large players (including banks) act as market makers, providing market liquidity. Read more about market makers.

The professional securities market abroad may differ somewhat from the Russian one in terms of rules and composition of participants, but in general, the stock markets of different countries are regulated in a similar way. For example, the US market is much larger and more liquid than the Russian market: a significantly larger number of securities are traded on it and are in demand. Accordingly, the share of private investors abroad is significantly higher than the domestic figure. If in the Russian Federation only 1% of the population is active in the stock market, then in the USA - almost 50%, in Germany and Japan -30%, in Australia - 40%.

Typology of securities

The securities market in Russia is represented by shares, bonds, bills, checks, mortgages, investment shares, bills of lading, double and simple warehouse receipts, certificates of pledge - warrants, savings and deposit certificates, etc.

Novice entrepreneurs and investors get confused by numerous securities, and strange names sometimes create the illusion of a particularly complex market. For example, the unusual term “blue chips” is used to refer to shares of the most stable companies, and “fallen angels” are securities of previously profitable companies that have now fallen in price. In the 80s, Buffett, known for his love of cheap but promising securities, successfully invested in fallen angel bonds.

Experts have not yet compiled an exhaustive list of classifications, since financial securities markets are developing dynamically and new products appear on them from time to time. Common typologies of securities are summarized in the matrix below:

CAPITAL/ INVESTMENT (receiving income, increasing company capital) shares, bonds, cooperative shares, investment certificates, mortgage notes, issuer options	CASH (DEBT)/NON-INVESTMENT (servicing cash payments, ensuring capital circulation) commercial and financial bills up to 1 year, bankers' acceptances, commercial corporate papers up to 1 year, short-term savings notes and bank certificates of deposit, government treasury bills, government bonds for 3, 6, 9, 12 months, check, bill of lading
PRIMARY / BASIC (provide monetary and property rights) shares, bonds, bills, pledges, bank certificates		SECONDARY/DERIVATIVES (provide the right to primary securities, the cost depends on the primary) stock warrants, depository receipts, issuer option, futures, swaps
MORTGAGE (service the mortgage agreement) mortgage bonds and participation certificates, pledges/mortgages, FON certificates	PRIVATIZATION (the right to receive a share of property free of charge) privatization check	COMMODITY DISPOSAL (the right to dispose of the specified property) bill of lading, warehouse receipt, warrant
EMISSIONS (produced in large quantities, registered) shares, bonds, bank certificate, issuer option		NON-EMISSIONING (issued individually) bill, bill of lading, mortgage
(ownership of shares in the authorized capital) shares, investment certificates		DEBT (loan of funds) bill, bonds, government treasury bills, bill of lading, savings (deposit) certificates
shares, mortgage, bonds, bill, bank certificate, bill of lading, issuer option, gold certificates	IN BEARER bonds, bill of exchange, bank certificate, bill of lading, OGSS	WARRANTS (transferred to another person by making an endorsement) bond check, bill of exchange, bank certificate, bill of lading
STATE (issued by government agencies) GKO, OFZ, OGZZ, KO, OVVZ, gold certificates		CORPORATE (issued by commercial organizations) shares, bonds, bills, eurobonds, euronotes, euroshares
(limited lifespan) deposits, bonds, bill of exchange, bank certificate, bill of lading, mortgage		LIFETIME (lifetime is not limited)
DOCUMENTARY (paper form) shares, bonds, bill of exchange, bank certificate, bill of lading, mortgage, OGSS		UNDOCUMENTARY (entry in the register of holders) shares, bonds, state bonds
INCOME (generate income)		UNINCOME (certify the owner’s right to goods, money, and not to capital)
IRREVOCABLE (cannot be withdrawn or repaid early)		REVIEWS (can be withdrawn and repaid early)
MARKET (freely traded on the market)		NON-MARKET (cannot be resold, returned only to the issuer)
WITH A CONSTANT DENOMINATION (money denomination indicated upon issue)		WITH VARIABLE RATING (issued without monetary denomination)
FIXED INCOME (income amount is indicated in advance)		WITH FIXED INCOME (the amount of income is determined based on the results of work)
NATIONAL (issued by residents of the state)		FOREIGN (issued by residents of a foreign country)

In abbreviated form, you can use the following scheme:

Risks and returns of securities

The market is in constant motion. New securities appear, old ones disappear. World-famous giants are losing popularity, and previously unknown new stars are taking their place. Some companies go bankrupt, while others' shares soar by thousands of percent. Huge markets for new asset classes are emerging, as happened with mortgage bonds in the 1980s. They inflate and global events occur. How can a lonely investor not get lost in this ocean?

Investing money, incl. When purchasing investment securities, investors seek a balance between risk and reward. However, it is not at all necessary to have a good understanding of every type of security in the table above to be a good investor - the ability to use a compass and navigate by the stars can be enough to guide a ship on the ocean to its goal. Although the experience of actually facing the waves of the market undoubtedly adds stability to your ship.

Until now, the most popular among Russians are bank deposits with low yields, for which exchanges and securities are not needed - however, it is quite possible to find, for example, large Russian issuers whose bond yields will be a couple of percent higher than the yield of standard deposits. The risk is that deposits are insured against bankruptcy of the bank, but not against bankruptcy of the issuer. And if the deposit is not taxed, then when working with the bond, income tax may arise. In addition, since 2015, an individual investment account () has been available to Russians.

The best way to optimize risks is portfolio investing. For a primary understanding, we can say that it is aimed at diversification - combination, taking into account their urgency, reliability, riskiness and profitability. Thus, potential losses from risky assets in bad periods are offset by guaranteed profits from less risky ones. But in fact, this method has other advantages.

Numerically, risk is measured by the standard deviation from the average return of a security. Simply put, this is the range of fluctuations in quotes - and the more profitable the asset, the stronger the fluctuations: when purchasing potentially highly profitable securities, there is a high risk. How will you feel if, having bought a stock for $100, at some point it will cost twice as much? Therefore, a classification has been developed for investors to help make decisions:

• risk-free – US government short-term debt obligations up to one year (Treasury bills);
• low-risk – government bonds (GKOs, and others);
• medium risk – bank certificates, mortgages, corporate;
• high-risk – stocks and derivatives (derivatives).

Gamblers willing to take risks for profit are attracted to stocks and derivatives. Conservatives will choose OFZs, bills and investing in gold. Prudent investors are focused on building a portfolio of different securities. The described classification is often represented by something like this diagram:

However, you need to understand the difference between stocks and derivatives. In the simplest case, a derivative instrument can be represented as a change in the price of an asset multiplied by a certain coefficient. For example, if the price of a stock rose by 1%, then that stock could rise by 10%. But the fall will also be corresponding. The mechanism of derivative instruments is based on leverage from the liquidity provider - in other words, the credit for the transaction of buying or selling futures.

And here lies the main difference. A derivative is a swing game, a casino. A bet on the rise or fall of an underlying asset using leveraged funds. At the same time, the long-term change in stock price has a different nature - it is an indicator of the performance of the company's business. Since stocks and entire markets can fall by 50% or less in the short term, using even a very small 1:2 ratio can result in a complete loss of funds. The stock market is growing in the future, but greed in the form of buying a derivative instrument can destroy all capital, as it will not allow you to survive the inevitable market drawdowns. And this capital will go to another player - the one who bet on the fall.

Future of the market

The securities market has great prospects associated with positive trends:

• the level of capitalization of companies and the volume of exchange transactions increases;
• information support has improved, trading technology has changed - exchanges have become electronic;
• organizational changes are taking place - trading platforms are becoming self-regulating;
• investor activity in purchasing shares is growing;
• Changes in pension, tax legislation and social security encourage private investors to actively work in the market.

The attractiveness of participation of individuals and organizations in investment operations is also increasing as the global financial market takes shape.

Hello!

Raising capital is one of the most important tasks of companies operating in a market economy. And the main place to receive financing is the stock market. Therefore, in this article I want to talk in detail about how the structure of the securities market works.

What applies to primary trading? Where can you make transactions to purchase investment assets? How does the derivatives section differ from the spot section? What instruments can be traded on stock exchanges? I will try to answer all these questions in clear and simple language.

The securities market (SS) is one of the components of the general structure of financial markets, which is responsible for the redistribution of capital among the means of circulation of securities.

This concept combines the entire structure of economic relations that arise during the issuance and circulation of securities.

In turn, securities are secured civil property rights. Now all instruments of this type are issued in book-entry form, and information about their holders is recorded in special depository structures.

RCB structure

The structure of the securities market is quite diverse; it is appropriate to divide it depending on the definition of certain characteristics:

• stages of securities circulation;
• level of regulation;
• shopping location;
• type of trade;
• deadlines;
• tools;
• residence of the participants.

I will talk in more detail about each of these signs and their internal structure below.

Depending on the stage of circulation of the security

The securities market is a complex structure and is largely heterogeneous, therefore the circulation cycle of financial instruments is always divided into two stages, creating separate categories of trading.

Thus, the securities market is divided into the following types:

• primary;
• secondary.

Primary

At the primary stage, securities are issued and placed in the process of circulation on stock markets for purchase by a wide range of investors.

From the point of view of legislation, at this stage all economic relations arising as a result of the issue and initial purchase of issued securities by professional participants or private investors are determined.

As a result of the initial sale of shares, bonds or other stock assets to investors, the issuer receives cash, which it subsequently uses in the structure of its operating activities.

Secondary

The secondary market characterizes all legal relations between the parties regarding securities previously issued for circulation.

At this stage, there are no more cash flows for the issuer, and investors take advantage of the liquidity of the instruments, i.e. buy and sell them in search of the best profitability for themselves during secondary trading.

The secondary market is an important component of the overall economic structure, since without it the success of the primary placement is called into question. After all, not every investor is ready to buy something that will later be extremely difficult to sell, essentially freezing their capital.

Depending on the level of adjustability

Regarding the conditions of the regulatory structure, securities markets are divided into the following types:

• organized;
• unorganized.

Organized

On organized securities trading platforms, a special role is played by uniform requirements and rules that establish all legal and economic aspects in relation to each category of participants.

Unorganized

In unorganized trading in securities, there are no firm, uniform rules for all, and in most issues, participants try to establish individual agreements.

However, it is important to understand that the general requirements of the law must be met by all participants in legal relations, regardless of the form of the regulatory structure for the circulation of securities.

Depending on the place of trade

Regarding the availability of trading infrastructure, the RCB can take the following form:

• stock exchange;
• OTC.

Exchange

This includes organized stock exchanges. The process of exchange quotation and control over transactions is carried out here by specialists in the field of exchange business.

In addition, the structure of specialized exchanges always establishes certain requirements for investment instruments that can be admitted to trading, and the market value of securities is formed by the market, i.e. through the ratio of supply and demand of participants at each moment of trading.

OTC

Trading outside an organized exchange platform takes place through the services of banks, dealers, brokers or individuals, where transactions are made directly with the counterparty, i.e. bypassing the exchange structure.

The peculiarity of such financial relations is that the price of assets is set in a random or chaotic manner, depending not on supply and demand, but on the individual agreements of the counterparties who are parties to the transaction.

Thus, in unorganized trading, completely identical securities at the same point in time can be sold at completely different prices.

Depending on the type of trade

Regarding the type of transactions, securities markets are divided into the following types:

• public or voice;
• computerized.

Now the relevance of this division is no longer so great, since the prevailing number of transactions are carried out through computer systems. But still, I think it’s correct to identify both of these methods.

Public or voice market

This is a classic type of financial relationship in which participants make their transactions in a certain place through public bargaining.

This also includes individual transactions and the conclusion of agreements between counterparties, which for some reason are not made public. That is, bidding with a limited number of interested parties.

Computerized market

Computerization involves the use of a remote network that combines orders from different participants in stock exchanges or over-the-counter trading.

At the same time, the process of making transactions and recording participants is fully automated, and the interaction of counterparties in a transaction occurs exclusively through issuing orders in the electronic system.

Depending on the terms for which transactions are concluded with the Central Bank

Regarding the timing of execution of transactions, the securities market can be:

• cash;
• urgent.

Cash

Cash (spot) is called a securities market, on which transactions for the purchase/sale of financial assets and the rights assigned to them are carried out in real time.

However, from a technical point of view, a transaction to purchase shares or bonds is often officially executed within 1 to 2 days after the date of the transaction. There may be a time lag due to the change being committed to the registry.

Urgent

As a rule, derivatives are represented in the trading structure of the derivatives section. These are contracts that fix the rights or obligations to complete a transaction with a deferred time horizon.

Basically it ranges from one to several months.

Depending on the instruments traded on the market

When trading on financial platforms, transactions are made with a large number of stock instruments, which in turn have many different characteristics.

Therefore, it is advisable to divide the securities into the following types:

• monetary;
• investment or capital market.

Monetary

Here are instruments whose structure implies a maturity of less than 1 year.

Such financial assets, for example, include:

• payment certificates;
• bills;
• short-term bonds.

Capital market or investment market

It can be:

• stock;
• medium and long term bonds.

Depending on the citizenship of market participants

The division according to citizenship (residence) of participants is justified and even necessary. This is primarily due to the fact that different requirements, rights, tax bases, etc. may be established by law for different categories.

With regard to this aspect, the structure of the RCB can divide them into:

• residents;
• non-residents.

Residents market

Here, stock instruments issued by residents of the country for circulation on domestic market platforms are traded.

Non-resident market

Here, stock instruments issued by foreign residents for circulation on Russian stock exchanges are traded.

Such assets must fully comply with the requirements and legislation of the country in which they are traded.

Conclusion

In this article I tried to briefly examine the entire structure of securities circulation.

To summarize, I would like to note once again that the stock market is an important component of any market economy, which our country is.

It serves to mobilize economic resources, ensure liquidity of investments, distribute and redistribute capital, and also carry out the necessary regulation in this area.

Therefore, everyone who is at least to some extent connected with investments and finance should have knowledge of its structure, requirements and model of activity.

That's all. See you in the comments and next articles.

Hello! In this article we will talk about the stock market.

Today you will learn:

• What is the stock market;
• Who works in the stock market;
• How trading takes place on the stock market;
• How to start trading in the stock market yourself.

On the one hand, the stock market is an area for limitless earnings, raising funds, literacy and increasing capital. On the other hand, there is the possibility of losing everything in one impulsive and wrong decision. It will take a lot of time to learn all aspects of the stock market. Let's figure out if it's worth it.

What is the stock market

Stock market is a set of mechanisms that allow individuals to carry out transactions with securities.

Some people believe that the stock market is only responsible for securities, but this is far from true. Just look at what is traded on stock exchanges and everything will become clear. There are currencies, commodities, securities and derivatives that facilitate financial trading.
At the same time, with the English name everything is also not so clear. Collocation stock market previously also interpreted as the securities market. But now, with the development of modern technologies, we are coming to the understanding that it is impossible to divide the three components of one market into separate areas, therefore, the concept of the stock market defines the majority of “goods” for investment.

Now let's figure out what is traded on the stock market. When it comes to securities, the main commodities will be stocks and bonds. Bills of exchange and certificates are also traded on the market, but much less frequently. Let's understand what a stock and a bond are, consider their main differences and the benefits of a particular security.

Promotion – an equity security that gives the owner the right to part of the organization’s property upon liquidation, as well as receiving dividends.

Shares can be non-preferred and preferred. Their main difference is that the income of the former fluctuates depending on the financial result, while the income of the latter is stable, but their owner does not have the right to vote on the board of directors. Non-preferred shares are more common.

Bond - a debt security that guarantees the owner the right to receive from the issuer the nominal price of this security.

A more conservative financial instrument that allows you to make a profit with a greater chance.

Derivatives – futures and options.

Stock market participants

Stock market participants can be divided into several categories:

• Issuers – persons who issue securities;
• Investors are persons who buy securities.

In addition to these two categories, there are those who are responsible for the operation of the exchange: depositories, the register manager, the clearing house, etc. These bodies are responsible for the functioning of the entire system. Thanks to them, communication is established between all participants, sales occur every second. They take a small commission for their work.

There are also two more special categories of participants:

Broker – a person carrying out transactions for the purchase/sale of securities on behalf and at the expense of the client.

These can be either credit organizations or special companies that carry out brokerage activities. Now their competence also includes trust management (using the client’s funds to generate his profit), consultations, training, etc.

Dealer – a person who carries out purchase/sale transactions of securities on his own behalf and at his own expense by publicly announcing the purchase/sale price.

These are professional market participants who require a license to carry out their operations. The conditions for obtaining such licenses are regulated by the bank. At the initial stage, with minimal turnover on a trading account, you can use only basic instruments, which does not allow you to accelerate to good money in a short time.

Functions of the stock market

Now let's talk about the global function of the stock market. It will allow you to understand the essence of this phenomenon, which will bring you one step closer to making a profit.

So, the main function of the stock market is the redistribution of funds. Everything is the same as in the term “investing”. People who have excess funds give their money to those who have a lack of funds.

It often happens like this: a company needs free funds for development -> issues shares -> attracts funds -> develops -> pays dividends (profit).

In America and the West, the economic importance of the stock market is difficult to overestimate. For example, in America, the unorganized securities market is so developed that shares of companies that have just been created could be bought literally in a garage.

This was used both by stockbrokers (who sold worthless securities to unknowing investors) and by traders who hoped to benefit from these securities if they suddenly went up. Now things are a little different.

In the West, banks are very actively involved in the task of redistribution. They attract financial resources from the population, increasing their monetary capabilities to the maximum, and redirect them to the stock market.

By buying shares or bonds of companies or even states, they provide the cash that borrowers need. And after that, they make a profit both from loans and from transactions with securities, and again redirect the funds to purchase securities.

A vicious circle, thanks to which you can successfully stimulate the development of the economy, business of any scale and, most importantly, reduce the gap between classes.

What about the stock market in Russia now? The answer to this question is not so clear-cut. On the one hand, we have a weak development of an investment culture among the ordinary population, and on the other, the Central Bank is talking about the transition to an investment model of the economy. With such statements, you can safely expect that in 10-15 years, the culture of buying securities in Russia will grow significantly, and knowledge of the stock market, as well as the mechanisms of its operation, will be extremely valuable.

Another function follows from this function – state budget management. You can increase the state the budget at the expense of the population - by issuing federal loan bonds. In this way, free funds of the population are attracted and with their help the main holes in the budget are paid off.

The activities of the stock market in Russia are regulated by the Central Bank.

How does trading work in the stock market?

Independent trading on the stock market is simply unrealistic for a private investor, especially in the realities of the modern Russian economy.

In order to directly buy shares on the exchange, you will need:

• Get a license;
• Pay the entry fee. On MICEX – 3 million rubles;
• Buy special software that costs from 100 thousand rubles.

That is why the entire trading mechanism for beginners and traders who do not have huge capital depends on brokers. As mentioned earlier, these are legal entities that carry out transactions on behalf of clients. They receive a commission for their services, thus earning money.

If you do not plan to trade on the stock exchange yourself, or you do not have large free funds, it is recommended to use the services of a broker. But if it is possible to independently obtain a stock exchange player’s license, then it is strongly recommended to do so, because the broker charges a commission, which significantly reduces the profit on each transaction.

How to start trading in the stock market

That is why, in order to start trading on the stock market, you need to carry out the following operations:

Step 1. Choosing a broker. This is one of the most important stages, thanks to which you can either start making a profit (at first play at a loss or zero) or go bankrupt at one point. In order to choose a good broker, the first thing you need to look at is the stability of payments. It doesn't matter how much you earn, what matters is how much you can take back.

One of the famous poker players said:

Back then, winning money in poker was not a problem. The main problem was to leave with the winnings.

Of course, there are fewer dishonest brokers now, but they still exist. After this - the cost of services, commissions, software and other application parameters.

Step 2. Installing the software on the user's computer and its basic configuration. One of the easiest stages, because most brokers have their own support service that can help with all technical issues.

It is much more difficult to learn about all the functions of the terminal. They are often quite difficult to learn, and it can take several days to understand what each button does. After this, we can say that the terminal has been mastered, and now you can safely start trading.

Step 3. Open a demo account. At this stage we are not learning or even testing the strategy. Just checking the functionality of the trading terminal. Playing on a demo account and on a real one is sometimes very different, primarily due to psychology and the pressure of real money.

For beginners, such accounts are dangerous because they can give a false impression that they can do something and can immediately become a profit. Just test the terminal's capabilities, trade a little, understand when to apply your strategy and now open a real account.

Step 4. Open a real account and make your first deposit. From this moment begins a long journey of becoming from a novice trader to a seasoned wolf in the stock market. This path often takes more than one or two years, but it begins with this step.

Step 5. Start playing on the stock exchange using an already developed strategy. From this moment on, the trader receives profits, losses, closes profitable positions, or loses all his money in the account. It all depends on the trader.

Step 6. Gathering information, preliminary analysis, gaining knowledge and preparing a strategy. This will be stage zero, which everyone must go through before moving on to the first step - choosing a broker.

How to make money on the stock market

There are two main ways to make money on the stock exchange – investment activity and speculative activity. Their main difference is that investments are medium- and long-term with the aim of receiving profit from sales, dividends, and redemption of securities. Speculative activity involves the purchase and sale of securities for the purpose of resale and making money on price fluctuations.

A more profitable method is speculative. More reliable - investment.

Now about how you can make money by investing:

• Buy shares. The riskiest type of securities. It allows you to receive annual dividends, which depend on the financial performance of the enterprise. It is recommended to buy shares of fairly reliable issuers - Google, Apple, Samsung, etc.
• Buy bonds. A more reliable way to invest money. Interest on some bonds is comparable to bank deposits, but nevertheless they are quite a profitable instrument if you know how to combine profitability and risks. After all, everyone knows that the higher the yield of a security, the higher the risk of non-payment for it - the issuing company. At the same time, developing companies, on the contrary, set prices below the market average in order to thus compensate for the risks of investors and attract attention to them.
• Buy certificates. One of the most controversial ways. A certificate is one of the financial instruments, a kind of analogue of a bank deposit. With several differences - the certificate can be placed at absolutely any amount, the certificate can be transferred, sold without loss of interest, etc.

Speculators have a narrower range of ways to earn money:

• Resale of shares. One of the most important ways to earn money. It can bring returns of up to 20-30% per day, but the losses can also be huge. A very risky method that requires good knowledge from the trader;
• Using Futures and Options. They allow you to transfer your purchase to a future period at current prices.

Depending on the method of earning, the profit, risks and financial instruments used to obtain profitability vary. Each trader must choose for himself in what volumes he is going to trade, with what and what profit he expects, and from this he should choose a financial instrument.

What are blue chips

Blue chips are recognized as the most stable companies that are guaranteed to pay their investors money, have enormous stability and, as a result, low risks and low returns. Blue chips are the basis for conservative investing.

In Russia, the blue chips are raw materials companies, Sberbank, VTB, Moscow Exchange and other large companies. They have been more stable over the past few years, are guaranteed to bring money to investors and annually attract additional funds through additional issuance of shares and bonds.

And now five real tips that can help investors get guaranteed profits:

1. Constantly study the stock market. The securities market is almost the same as IT technology. He is constantly evolving, constantly on the move. It is changeable, fluid and thanks to this there is no certain way to win and get rich. Carefully study trends, changes, view news, new strategies, look for ways to improve your skills. All this will be useful and all this will make the game a plus.
2. Remember that you are not only playing against other traders, but also the broker. Many people forget this fact and often end up in the red over the long haul, despite the fact that they seemed to be winning. Those few percent that are retained by the broker and the entire exchange apparatus hit the pocket of an ordinary trader very hard.
3. Have a clear strategy. Everyone must choose and adapt a trading strategy for themselves. The combination of the style of playing on the stock exchange with character traits, risk appetite, profit requirements and many psychological factors allows you to achieve high results simply by following one “playing style”. But at the same time, the strategy must be flexible enough to adapt to market changes.
4. Emotional control. This does not mean a complete rejection of impulsive transactions “by intuition”. This means analyzing all trades and finding the optimal method. Even if the trader makes most of the profitable trades that he opened thanks to his intuition, he must continue to do so. But if emotional decisions brought only losses, then it is recommended to reconsider the approach to opening transactions. Analysis and only analysis.
5. Keeping a trade diary. Probably one of the most important tips. The transaction diary is a place where all the information is recorded: when the transaction was opened, the essence of the operation, what the strategy was, what was expected, what happened, profit or loss, why the transaction was opened. And after each day, an analysis is carried out that allows us to identify what turned out to be profitable and what was unprofitable. Over time, such a diary grows into a full-fledged analytical notebook for a trader, thanks to which he can track his progress, and also gets the opportunity to analyze which approach brings him more income.

These simple tips can really help you trade on the stock market even more successfully than before.

The main mistakes of novice investors

Now about the five main mistakes of novice investors:

• Taking profit too early. Beginners try to take profits as soon as they appear. This is a very wrong approach. Ideally, you should take profits either at the time of the price peak or at the time of the decline, but this situation is achieved very rarely. It’s better to wait it out and immediately sell or buy at the first signs of an opposite trend;
• Emotional game. As mentioned earlier, lack of emotional control can lead to unwanted transactions. It’s better to control your emotions once again. After all, you can’t tell from the face of an experienced trader whether he has just lost $2,000 or won;
• Lack of diary. As mentioned above: a diary is one of the most important elements for self-analysis;
• Constant change of strategies. Finding the optimal strategy is one of the features of the stock market as a whole, but constantly changing strategies cannot lead to anything good. After all, you cannot quickly understand all the pitfalls of a particular strategy without playing with it in practice. That is why you need to spend some time studying the strategy, learn how to play it, and only then change it if it is not suitable for the stock market.
• Lack of a mechanism for recording losses. This is one of the most important mistakes, which, when trading with a broker’s leverage, can lead to a complete loss of your bank account. Stop loss– This is an option in which losses are recorded. It is usually placed below the current price if you are buying and above the current price if you are selling. Such a tool is available in every trading terminal, and it allows you to minimize risks. Its proper use will protect you from unnecessary losses.

The essence of the stock market can be succinctly expressed in one phrase - I win only when others lose. And this is the most effective definition of playing on the stock exchange.

Indeed, when one player makes a wrong decision, the other one wins. This is what is good about the stock market. It allows you to play against the same traders, ordinary people.

The stock market is an important tool for both the state and ordinary people. It allows you to more effectively redistribute monetary resources both between sectors of the economy and between individual legal entities and individuals.

The stock market is a place where you cannot stop developing. You can only move forward in pursuit of new skills, trends, changes and profits. Without this, it is impossible to achieve outstanding results.

There are several books that are required reading for anyone who wants to become somewhat familiar with the techniques of stock trading and stock investing:

• Alexander Elder – Fundamentals of stock trading. A theoretically outdated reference book in terms of trading strategies, which allows you to understand the psychology of playing on the stock exchange and understand what influences prices. To put it very roughly - a reference book of applied stock psychology;
• Benjamin Graham - The Intelligent Investor. A book that is needed primarily for those who want to make high-quality passive income using securities. You need to look for the latest edition, as it contains truly practical advice based on current stock exchange situations. Suitable for both beginners and professionals.

These two books are the foundation for understanding stock trading and investing. With their help, you can create a certain base from which you can build upon when studying additional materials.

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The securities market is a set of transactions for the purchase and sale of official, legally binding securities, which are financial instruments, for the purpose of investing money and making a profit. The most common among securities are shares. These are securities indicating ownership of a certain share in a certain organization. Also popular are bonds that indicate the right of their owner to receive a certain amount in the future and a certain income at fixed intervals. By selling their shares, companies raise the additional capital they need to ensure their livelihoods. Anyone who purchases shares receives the right to part of the income and property of the company that issued them. Despite the fact that the price of securities is not constant, and very much depends on the opinions of market participants, stocks remain one of the main ways of investing, and are often used as an indicator of the general state of the economy.

Shares and bonds on the securities market

When companies need money to carry out their plans, one way to obtain the necessary capital is to divide their property into parts, and represent each part in the form of a share. The companies then sell their shares and use the proceeds to develop new products, buy buildings, equipment, etc. Companies also issue securities called bonds. A bond gives its owner the right to receive a specified amount of money on a specific date from the company that issued it. People who buy stocks and bonds are called investors. Due to the close relationship between the concepts, many newcomers to the securities market use the words “stock” and “bond”, as well as “shareholder” and “investor” interchangeably, which, of course, is a mistake.

As owners of a certain share in the company, shareholders are entitled to a certain percentage of its material assets and income from business activities, i.e. are the beneficiaries (beneficiaries) of this company. Investors hope that the company in which they bought shares will prosper because... As the company's income increases, the value of its shares will increase, and, accordingly, the income of investors. In most cases, the main goal of every investor is to buy a stock at a low price and then sell it at a higher price. There are ordinary and preferred shares. When purchasing common stock, the holders generally have the right to vote on matters related to the company's activities. One ordinary share equals one voting right. Holders of such shares receive quarterly and annual reports from the company, allowing them to assess its financial condition. Preferred shares do not provide voting rights, but many investors love them because they give the right to a larger percentage of the company's income and assets, and in the event of bankruptcy of the company and the liquidation of its assets, holders of preferred shares have priority over holders of common shares in payments due to them.

Functions performed by the securities market

In its simplest description, the securities market provides organized interaction between companies and potential investors who wish to purchase shares and thereby become co-owners of a business enterprise. When a company wants to sell its shares, it registers with the stock exchange, which organizes transactions related to the purchase and sale of securities. In order to register on the exchange, a company must go through a rather complex verification procedure and meet the requirements of the exchange. Compliance with these conditions allows investors to treat the company as a less risky enterprise. Shares of such companies sell better than those traded on the over-the-counter market. The New York Stock Exchange and the National Association of Stock Dealers are the most famous trading platforms around the world, and the most popular exchanges in the United States.

The process of buying and selling securities

If an investor is interested in buying or selling securities, he contacts a stock broker who is an employee of a company that has the right to conduct trading operations on the stock exchange. The broker sends a request to the appropriate exchange and receives a certain fee for his services, and a representative of the company whose securities are wanted to be purchased or sold fulfills this request. In the past, the trading floor on the stock exchange was a room where stock brokers met in person every day and carried out the purchase and sale of securities. Today, electronic trading platforms are much more often used, where the process of buying and selling securities is carried out using a computer, the Internet and a telephone.

There is a fairly widespread misconception that in order to become a participant in trading on the securities market, an investor must have a large amount of money. In reality, the investor only needs to consider and compare the potential profit with the commission that he will pay for the transaction. There are many stocks with relatively low prices that provide good returns if you invest in them for the long term. Due to the fact that brokers receive their commission for each completed order, they are interested in carrying out the purchase and sale of a relatively small number of securities, because a small quantity is much easier to buy or sell, and therefore carry out a larger number of transactions for which they will receive payment. In addition to individual purchases of securities, a large number of investors direct their money to so-called mutual funds (MUIFs), which allows them to invest together with other participants in the securities market and buy more expensive shares and in larger quantities.

Price of shares on the securities market

Initially, the share price is determined at the time the company conducts an initial public offering of its shares on the stock exchange. This event bears the English abbreviation “IPO” (Initial Public Offering - initial public offering of securities). During the initial placement, the bank organizing this procedure on the stock exchange uses various methods and formulas to assess the value of the company. Then, the resulting amount is divided by the number of shares planned for issue. This is how the initial price of one share is formed. After this, the price of a company's shares largely depends on the general opinion of securities market participants. Based on the principle of supply and demand, if market participants believe that a company is not doing well, then they are unwilling to buy shares of that company, and demand for them falls, reducing the value of the shares. On the contrary, if the opinion of market participants is that the company is developing well and successfully, and they expect it to receive good profits, part of which the holders of its shares can count on, then investor interest in such securities increases, which leads to an increase in demand for shares and their cost.

Bulls and bears in the stock market

If one of the participants believes that the price of shares will decline, then they say that he is in a bearish mood, and he is very cautious about buying such securities. Participants who believe that stock prices will rise are called bullish investors, and they tend to buy securities in large quantities. Likewise, the stock market itself, which tends to rise, is called a “bull market,” and a falling market is called a “bear market.”

Formation of a securities portfolio

A person has many options for investing his money. He can invest it in real estate, put it in a bank savings account, transfer it to a pension fund, or transfer it to a trust fund. Another option is to purchase securities. Traditionally, securities have outperformed other investments in terms of returns, and most financial experts consider securities an important part of building an investment portfolio, urging investors to regularly participate in trading them on the stock exchange.

Despite the fact that experts are not always unanimous on the question of which securities are best to form a portfolio from, they, as a rule, always advise buying shares of as many different companies as possible. Following this advice reduces the risk of large financial losses, because... if a company goes bankrupt, the investor will have securities of other companies, the profits from which will cover the losses associated with the first one. Some investors develop this topic even more broadly, arguing that purchasing shares of different companies is not a sufficient condition for the safety of financial investments, and it is necessary to form a portfolio of securities linked to various sectors of the economy, because Disruptions and disagreements of various kinds often shake the entire sector.

The securities market as an indicator of economic health

To some extent, the stock market shows the overall health of the economy. In most cases, stock prices decline when the economy experiences some difficulties because... when there is a lack of financial resources, the population is not inclined to purchase any securities, but concentrates on essential spending, such as food or mortgage payments. Accordingly, if there is a lack of demand for shares, their prices decrease. Also, the decline in share prices of companies in general is due to the fact that the business activities of many of them are very interconnected. For example, the relationship between computer manufacturers and microprocessor manufacturers. When a consumer company of a product suffers, the company producing this product also gets its share of difficulties. Conversely, in the case when the securities market shows an upward trend in stock prices, this means that the population has free money that they are willing to invest, and given the relationship between supply and demand, we can conclude that high activity in the securities market securities indicates a good state of the economy.