How does Stock trading work?
Stock trading involves the buying and selling of ownership shares in individual companies listed on exchanges such as ASX and NASDAQ. Trading stocks usually does not involve leverage and is conducted through a stock exchange. However, trading in stock CFDs can be done using leverage and happens over-the-counter (OTC). Participants can access stocks of individual companies, building positions in specific sectors of the economy.
Moreover, participants often employ diversification strategies to diversify unsystematic risk across multiple companies or sectors. Investors may choose to build positions in defensives to prepare for volatility or to build a portfolio focused on a growth strategy consisting of small to mid-cap technology stocks.