subscription and trading are one of the most common terms associated with the field of equity trading. This is why they are often linked and sometimes their respective concepts are confused. Although there is no direct link between them, each represents a separate and present procedure itself, but many people do not distinguish the difference between subscription and trading.
In our article today, we will learn about the difference between subscription and trading, and the most important distinctions between each.
Difference between subscription and trading in stocks
At the outset, we can clearly say that both the subscription and the trading of stocks are completely separate, and the only link between them is that one depends on the other, that is, each of the stocks of companies currently available for trading in any of the global exchanges, had passed at some point. (Maybe shortly before or several contracts before) the IPO process.
What is a stock subscription?
The name of an IPO refers to a company’s process of placing a stock of its own on the public market. This stock is called a shareholding body and other investors can thus own it by buying or trading it through resale.
One of the most important reasons for companies to subscribe to the stock exchange is that equity subscription is considered the most rapid and effective means of providing the cash flows they need to conduct their business and finance their projects. And some companies use this method to repay debts or increase capital, Underwriting is safer than other means of providing liquidity. The most important advantage is:
Introduction of new partners to increase capital value.
Recourse to financiers.
Access to loans with high-interest rates from banks
What is stock trading?
As mentioned earlier, subscription and trading are successive phrases or other formats. One of these implies the other. From this point of view, we can say that trading stocks are the next stage that follows companies’ subscription and. placement on the public market on stock exchanges around the world.
Trading stocks can also be said to be a financial transaction aimed at earning profits through corporate stocks. That profit is made thanks to the constant and sustained movement of equity prices, which results from many factors, and the profit is the resulting difference. between purchase and sale prices.
Stock Trading Mechanisms
The trading of stocks takes place in multiple forms or other formats through different mechanisms. All depend on permanent movement in the share price, most notably:
Financial derivatives contracts.
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