What are Stocks and Shares?

What Are Stocks and Shares?

Learn the fundamentals of stocks, shares, and how they work in financial markets

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Stocks and shares represent ownership in a company. When you buy shares, you own a small portion of that business and gain exposure to its performance, value, and potential profits. The term stocks is commonly used to describe shares collectively and is often used interchangeably in finance.

Imagine a company as a pizza and shares as individual slices. Owning a slice means you own a portion of the pizza—just like owning shares means partial ownership in a company. If you own slices from multiple pizzas, you have a diversified stock portfolio.

However, owning a slice doesn’t mean you control how the pizza is made. Similarly, small shareholders typically don’t influence company decisions. Your ownership gives you a claim on company value and potential profits, but only after all debts are settled.

At Ohio Markets, you can trade stocks through Contracts for Difference (CFDs)—allowing you to speculate on price movements without owning the underlying asset.

What Does Owning a Stock or Share Mean?

When you own shares in a company, you:

Own a portion of the company’s assets and earnings
May receive dividends if the company distributes profits
May have voting rights on company decisions
Benefit from price appreciation if the company grows

Majority shareholders typically hold greater influence over company decisions.

Why Do Companies Sell Stocks?

Companies issue stocks to raise capital for:

Expanding operations
Launching new products
Paying off debt
Investing in research and innovation

Selling shares allows businesses to grow while offering investors a chance to participate in their success.

Stocks vs Shares: What’s the Difference?

Although often used interchangeably, there is a slight difference:

Stocks – Ownership across multiple companies
Shares – Ownership units in a specific company

Example:

If you buy 100 units of a company’s stock, you own 100 shares.

Simple Analogy:

Stock = Whole pizza
Shares = Individual slices

How Do Stocks and Shares Work?

Companies raise funds by issuing shares through an Initial Public Offering (IPO). Once listed, shares can be bought and sold on stock exchanges such as NYSE or NASDAQ.

Investors purchase shares to:

Participate in company growth
Earn dividends
Trade price movements

Another popular method is CFD trading, which allows speculation on stock prices with leverage.

What Is an IPO?

An IPO (Initial Public Offering) is when a private company becomes publicly traded for the first time.

Before an IPO:

Ownership belongs to founders, employees, and early investors

After an IPO:

Anyone can buy or sell shares on public exchanges

Investors benefit through:

Capital Appreciation

Profit earned when share prices rise over time.

Dividends

Regular profit payouts to shareholders.

Some fast-growing companies reinvest profits instead of paying dividends, while established companies often provide consistent dividend income.

Public Shares vs Private Shares

Aspect	Public Shares	Private Shares
Definition	Listed on stock exchanges	Not publicly listed
Availability	Open to all investors	Limited to private investors
Liquidity	High	Low
Transparency	Regulated	Limited
Examples	Apple, Amazon	Startups, pre-IPO companies

Types of Stocks and Shares Explained

Understanding stock categories helps investors choose smarter strategies.

Common vs Preferred Shares

Feature	Common Shares	Preferred Shares
Voting Rights	Yes	No
Dividends	Not guaranteed	Fixed
Growth Potential	High	Moderate
Risk Level	Higher	Lower
Liquidation Priority	Lower	Higher

Common shares offer growth and voting rights.
Preferred shares provide stability and fixed income.

Growth Stocks vs Value Stocks

Feature	Growth Stocks	Value Stocks
Growth Potential	High	Moderate
Risk Level	Higher	Lower
Dividends	Rare	Common
Company Stage	Emerging	Established

Growth stocks focus on expansion.
Value stocks represent undervalued stable companies.

Blue-Chip vs Penny Stocks

Feature	Blue-Chip Stocks	Penny Stocks
Risk Level	Low	High
Liquidity	High	Low
Dividends	Common	Rare
Company Size	Large	Small

Blue-chip stocks offer stability.
Penny stocks offer high-risk, high-reward opportunities.

Why Do Share Prices Fluctuate?

Stock prices change due to multiple factors:

Key Influences:

Supply and demand
Company earnings
Economic conditions
Investor sentiment
News and global events

Example:

Positive news increases demand, driving prices up. Negative news reduces confidence, causing prices to fall.

How Global Events Impact Stock Prices

Global factors can create volatility, including:

Economic recessions
Interest rate changes
Political instability
Trade disputes

Markets react instantly to uncertainty, influencing stock performance worldwide.

Trading vs Investing Stocks: What’s the Difference?

Long-Term Investing

Buy and hold for years
Focus on company fundamentals
Lower risk and steady growth

Short-Term Trading

Buy and sell frequently
Focus on price movements
Higher risk and faster returns

Risks and Benefits of Investing vs Trading

Investing Benefits:

Compounding returns
Passive approach
Long-term wealth creation

Investing Risks:

Market downturns
Slow growth

Trading Benefits:

Fast profit potential
Flexible strategies
Leverage opportunities

Trading Risks:

High volatility
Emotional decision-making
Leverage losses

How to Trade Stocks

There are two main approaches:

1. Buying Actual Shares

Own company equity
Earn dividends
Long-term strategy

2. Trading CFDs

No ownership required
Trade rising or falling markets
Use leverage for higher exposure

Owning Shares vs Trading CFDs

Feature	Owning Shares	Trading CFDs
Ownership	Yes	No
Dividends	Yes	No
Voting Rights	Yes	No
Time Horizon	Long-term	Short-term
Profit Source	Growth + dividends	Price movements
Leverage	No	Yes
Risk Level	Moderate	High

Advantages of CFD Trading with Ohio Markets

CFD trading offers:

Leverage for larger market exposure
Ability to trade rising and falling markets
Lower transaction costs
Access to global markets from one platform

How to Trade Stocks via CFDs with Ohio Markets

Step 1: Open an Account

Create a live trading account.

Step 2: Fund Your Account

Deposit using bank transfer, card, or e-wallet.

Step 3: Analyse the Market

Use technical and fundamental analysis to identify opportunities.

Step 4: Place Your Trade

Choose buy or sell, set leverage, and manage position size.

Step 5: Monitor and Close

Track performance using stop-loss and take-profit tools.

Start Your Trading Journey with Ohio Markets

Explore global stock markets, advanced trading tools, and educational resources with Ohio Markets.

Trade smarter. Trade globally. Trade with confidence.

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