HISTORY OF WORLD STOCK MARKETS

The history of stock exchanges can be traced to 12th century France, when the first brokers are believed to have developed, trading in debt and government securities. Unofficial share markets existed across Europe through the 1600s, where brokers would meet outside or in coffee houses to make trades. The Amsterdam Stock Exchange, created in 1602, became the first official stock exchange when it began trading shares of the Dutch East India Company. These were the first company shares ever issued.

The history of the earliest stock exchange, the French stock exchange, may be traced back to 12th century when transactions occurred in commercial bills of exchange. To control this budding market, Phillip, the Fair, of France (1268-1314) created the profession of couratier de change, which was the predecessor of the French stockbroker. At about the same time, in Bruges (a prosperous centre of the low countries of Europe), merchants began gathering in front of the house of the Van Der Buerse family to engage in trading. Soon the name of the family became identified with trading and in time a 'bourse' came to signify a stock exchange.

A brief history of the stock market might tell you that the world's first stock exchange was in Italy or in Egypt or even in France, but no matter where they originated, the concept of a place to trade stocks and bonds has taken firm root and stock exchanges are now the cornerstone of our financial marketplace.

More roots of stock markets are to be found at the beginning of the Industrial Revolution that began in Europe about four centuries ago. Many of the pioneer merchants of the industrial age wanted to start huge businesses, which no single merchant could raise alone. It therefore became inevitable for them to come together, pool their savings and start these businesses as partners or co-owners. The contribution of each partner to the enterprise was to be represented by a unit of ownership. This was the precursor to what we call shares. And through this, 'joint stock' companies were born.

Initially, trading in shares began as informal “hawking” in the streets of London. As the volume of shares increased with more companies floating shares (giving people opportunities to buy their shares), the need for an organized marketplace for the exchange of these shares escalated. As a result, these traders decided to be meeting at a coffeehouse, which they used as the marketplace. Eventually, they took over the coffeehouse and changed its name to 'stock exchange'.

By the early 1700s there were fully operational stock exchanges in France and England, and America followed in the later part of the century. Share exchanges became an important way for companies to raise capital for investment, while also offering investors the opportunity to share in company profits. The early days of the stock exchange experienced many scandals and share crashes, as there was little to no regulation and almost anyone was allowed to participate in the exchange.

Today, stock exchanges operate around the world, and they have become highly regulated institutions. Investors wanting to buy and sell shares must do so through a share broker, who pays to own a seat on the exchange. Companies with shares traded on an exchange are said to be 'listed' and they must meet specific criteria, which varies across exchanges. Most stock exchanges began as floor exchanges, where traders made deals face-to-face. The largest stock exchange in the world, the New York Stock Exchange, continues to operate this way, but most of the world's exchanges have now become fully electronic.

This was in the year 1773, and the first stock exchange, the London Stock Exchange, was founded. Wall Street can trace its name back to 1653. Originally it was set up for defense and not for commerce. Settlers of Dutch descent, who were always on the lookout from attacks by Native Americans and the British built a 12 foot stockade fence. Little did they know that this fence would go on to become the center of financial activity in the world. The wall lasted a good while, until 1685. At that point the wall was torn down and a new street was built. The British called it Wall Street.
 

The year was 1790. The place was Philadelphia. The occasion was the founding of the first stock exchange in America. Two years later a group of New York merchants met to discuss how to take command of the securities business. The merchants, a group of 24 men, founded what is now known as the New York Stock Exchange. But in early 1817, the merchant group from New York, distressed at the sorry state of their stock exchange, sent a representative to Philadelphia to observe how things were being done. Upon arriving with news about the robust exchange in Philadelphia, the New York Stock and Exchange Board was soon formally organized.

Other European exchanges that opened in the 1600s and 1700s included those in Belgium, Spain, Portugal, and Sweden.

The first American stock exchange was established in 1792 in New York at the intersection of Wall Street and Bond Street and it continues to be there today, having grown into one of the world's most influential stock markets. It is aptly called the New York Stock Exchange.

A brief history of stock market trading will show that the 1800s were a time of great innovation and growth for the stock market. It was in this century that government bonds, insurance and bank stocks started actively trading. It was also during this time that street trading was prohibited and the nyse found a home on Wall Street in a building of its own. Specialists were installed at particular locations on the trading floor to facilitate stock trade.

The 1900s were the time of the Industrial Revolution and saw much growth and expansion in the stock markets and their associated regulatory agencies. The Federal Reserve was set up to regulate the banking structure of the nation and New York gained popularity as the world's financial capital supplanting London as the previous financial hub.

The 1900s also saw the rise of speculators in a secondary trading market. Eventually this century was witness to one of the greatest stock market crashes in history, where stocks plunged and the Dow hit rock bottom by decreasing 89% in the period from 1929- 1932. This period immediately following the stock market crash was called The Great Depression because it saw many people lose their savings, lose their jobs and and some even lose their lives.

The stock market crash brought about much-needed regulatory changes into the stock market. The result was the passing of the Securities and Exchange Act which saw the formation of the Securities and Exchange Commission (SEC). The SEC is responsible for helping to ensure that such a crash never happens again by closely monitoring and regulating trading practices and ensuring that companies offer all relevant disclosure to the public at the time of going public.

Today there are a lot of new initiatives taken by the NYSE and other American exchanges such as a paperless office, women on the trading floor, real time stock tickers on CNN-FN and CNBC, an updated technology plan for the trading floor, global indexes, and representative offices around the world.

Beginner investors can learn a lot about the stock market by reading this and other related items outlining the brief history of stock market buoyancy and crashes - this will in turn help them understand what powers a bull or bear market

World-Stock-Exchanges.net features a list of world stock exchanges, securities commissions and other regulatory agencies, as well as stock market resources.

London Stock Exchange History - 1698
The London Stock Exchange is one of the world’s oldest stock exchanges and can trace its history back more than 300 years. The London Stock Exchange is arguably the oldest of the world's major stock exchanges. It can trace its history back to 1698, when its founder - John Castaing - began to organize the market in Jonathan's Coffee-house using a simple list of stock and commodity prices.

Starting life in the coffee houses of 17th century London, the Exchange quickly grew to become the City’s most important financial institution. Over the centuries following, the Exchange has consistently led the way in developing a strong, well-regulated stock market and today lies at the heart of the global financial community. Today, this exchange lists 3,500 companies representing 84 countries.

We are proud of our long history that has helped to build our reputation today. Here are some of the milestones in the story of the London Stock Exchange.

1698
John Castaing begins to issue “at this Office in Jonathan’s Coffee-house” a list of stock and commodity prices called “The Course of the Exchange and other things”. It is the earliest evidence of organised trading in marketable securities in London.

1698
Stock dealers are expelled from the Royal Exchange for rowdiness and start to operate in the streets and coffee houses nearby, in particular in Jonathan’s Coffee House in Change Alley.

1720
The wave of speculative fever known as the “South Sea Bubble” bursts.

1748
Fire sweeps through Change Alley, destroying most of the coffee houses. They are subsequently rebuilt.

1761
A group of 150 stock brokers and jobbers form a club at Jonathan's to buy and sell shares.

1773
The brokers erect their own building in Sweeting’s Alley, with a dealing room on the ground floor and a coffee room above. Briefly known as “New Jonathan’s”, members soon change the name to “The Stock Exchange”.

1801
On 3 March, the business reopens under a formal membership subscription basis. On this date, the first regulated exchange comes into existence in London, and the modern Stock Exchange is born.

1802
The Exchange moves into a new building in Capel Court.

1812
The first codified rule book is created.

1836
The first regional exchanges open in Manchester and Liverpool.

1845
More speculative fever – this time “Railway mania” – sweeps the country.

1854
The Stock Exchange is rebuilt.

1876
A new Deed of Settlement for the Stock Exchange comes into force.

1914
The Great War means the Exchange market is closed from the end of July until the new year. The Stock Exchange Battalion of Royal Fusiliers is formed – 1,600 volunteered, 400 never returned.

1923
The Exchange receives its own Coat of Arms, with the motto “Dictum Meum Pactum” (My Word is My Bond).

1939
The start of World War Two. The Exchange is closed for 6 days and reopens on 7 September. The floor of the House closes for only one more day, in 1945 due to damage from a V2 rocket – trading then continues in the basement.

1972
Her Majesty the Queen opens the Exchange's new 26-storey office block with its 23,000sq ft trading floor.

1973
First female members admitted to the market. The 11 British and Irish regional exchanges amalgamate with the London exchange.

1986
Deregulation of the market, known as “Big Bang”:

#   Ownership of member firms by an outside corporation is allowed.

#   All firms become broker/dealers able to operate in a dual capacity.

#   Minimum scales of commission are abolished.

#   Individual members cease to have voting rights.

#   Trading moves from being conducted face-to-face on a market floor to being
     performed via computer and telephone from separate dealing rooms.

#   The Exchange becomes a private limited company under the Companies Act 1985.

1991
The governing Council of the Exchange is replaced with a Board of Directors drawn from the Exchange's executive, customer and user base. The trading name becomes “The London Stock Exchange”.

1995
We launch AIM – our international market for growing companies.

1997
SETS (Stock Exchange Electronic Trading Service) is launched to bring greater speed and efficiency to the market. The CREST settlement service is launched.

2000
We transfer our role as UK Listing Authority with HM Treasury to the Financial Services Authority (FSA). Shareholders vote to become a public limited company: London Stock Exchange plc.

2001
We list on our own Main Market in July. We begin our 200th anniversary celebrations.

2003
We create EDX London, a new international equity derivatives business, in partnership with OM Group. We acquire Proquote Limited, a new generation supplier of real-time market data and trading systems.

2004
We move to brand new headquarters in Paternoster Square, close to St Paul's Cathedral.

2007
The London Stock Exchange merges with Borsa Italiana, creating London Stock Exchange Group.

When people talk stocks they are usually talking about companies listed on the New York Stock Exchange (NYSE). It's the big daddy and the big leagues. From a corporate perspective, anyone who's anyone is listed there, and it can be difficult for investors to imagine a time when the NYSE wasn't synonymous with investing. But, of course, it wasn't always this way; there were many steps along the road to our current system of exchange. You may be surprised to learn that the first stock exchange thrived for decades without a single stock actually being traded.

In this article we will look at the evolution of stock exchanges, from the Venetian slates, to the British coffeehouses, and finally to the NYSE and its brethren

New York Stock Exchange - 1792
The New York Stock Exchange or NYSE is arguably the oldest, and most well known, of all the American stock markets. The NYSE was formed in 1792 when two dozen stockbrokers from New York City had the idea to organize what was then a disorganized and chaotic method of stock trading. From those humble beginnings, the NYSE has continued to grow, and today lists 2,800 companies with a total capitalization of nearly $20 trillion. In 2007 a historic merger of equals created the NYSE Euronext.

The first stock exchange in London was officially formed in 1773, a scant 19 years before the New York Stock Exchange. Whereas the London Stock Exchange (LSE) was handcuffed by the law restricting shares, the New York Stock Exchange has dealt in the trading of stocks, for better or worse, since its inception. The NYSE wasn't the first stock exchange in the U.S., however, that honor goes to the Philadelphia Stock Exchange, but it quickly became the most powerful.

Formed by brokers under the spreading boughs of a buttonwood tree, the New York Stock Exchange made its home on Wall Street. The exchange's location, more than anything else, led to the dominance that the NYSE quickly attained. It was in the heart of all the business and trade coming to and going from the United States, as well as the domestic base for most banks and large corporations. By setting listing requirements and demanding fees, the New York Stock Exchange became a very wealthy institution.

The NYSE faced very little serious domestic competition for the next two centuries. Its international prestige rose in tandem with the burgeoning American economy and it was soon the most important stock exchange in the world. The NYSE had its share of ups and downs during the same period, too. Everything from the Great Depression to the Wall Street bombing of 1920 left scars on the exchange - the 1920 bombing left 38 dead and also left literal scars on many of Wall Street's prominent buildings. The less literal scars on the exchange came in the form of stricter listing and reporting requirements.

On the international scene, London emerged as the major exchange for Europe, but many companies that were able to list internationally still listed in New York. Many other countries including Germany, France, the Netherlands, Switzerland, South Africa, Hong Kong, Japan, Australia and Canada developed their own stock exchanges, but these were largely seen as proving grounds for domestic companies to inhabit until they were ready to make the leap to the LSE and from there to the big leagues of the NYSE. Some of these international exchanges are still seen as dangerous territory because of weak listing rules and less rigid government regulation

Despite the existence of stock exchanges in Chicago, Los Angeles, Philadelphia and other major centers, the NYSE was the most powerful stock exchange domestically and internationally. In 1971, however, an upstart emerged to challenge the NYSE hegemony.

The largest stock exchange in the world by dollar volume and over 2500 listed securities.

NYSE is operated by NYSE Euronext, the holding company created by the combination of NYSE Group, Inc. and Euronext N.V. NYSE is a world leader for listings, trading in cash equities, equity and interest rate derivatives, bonds and the distribution of market data.

American Stock Exchange - 1849
The American Stock Exchange or Amex is a relatively recent addition to the world's stock markets. The history of this stock market begins with the Curb Exchange and the California Gold Rush of 1849. The Amex played an important part in the financial and business transactions associated with the mining industry in the 19th century.

In 1921, the Amex expanded its niche role to include companies that did not meet the strict standards of the NYSE. In 1998, the NASDAQ purchased Amex and it continued its history of being a niche market player, specializing in derivatives and stock options. In late 2003, the American Stock Exchange regained its independence. After only six years under the control of NASD, The Amex Membership Corporation completed an agreement to transfer control of the exchange back to its membership.

In January 2008, NYSE Euronext announced it was acquiring the American Stock Exchange for $260 million in stock. The deal was completed on October 1, 2008, and the exchange was re-branded as the NYSE Amex Equities.
NASDAQ - 1971

We've even included a relatively recent addition in this article on stock market history. That's because we recognize the importance of this particular exchange. At one time, most companies aspired to be traded on the NYSE. That changed about 15 years ago, and many large companies now trade on the NASDAQ. Founded in 1971, the National Association of Securities Dealers Automated Quotation or NASDAQ was the first stock exchange to recognize the role of electronics in stock trading.

Today, the networks of computers running the NASDAQ allow it to be the most efficient stock exchange in the world. In October 2004, the NASDAQ surpassed the average trading volume of the NYSE for the first time.
Stock Price History

The Dow Jones Industrial Average is perhaps the most prestigious of all the modern day stock indexes. With a history dating back to May 26, 1896, one of the most interesting aspects of the Dow, which is also very indicative of stock prices, is the time it took to reach each of the 1,000 point milestones. For example, when the index was first introduced it stood at 40.94 and it took roughly 76 years to reach the 1,000 mark.

The complete milestone history of the average appears in the table below:
DJIA MILESTONES 

Milestone	Date	Time
1,000	November 14, 1972	76 Years
2,000	January 8, 1987	14 Years
3,000	April 17, 1991	4 Years
4,000	February 23, 1985	4 Years
5,000	November 21, 1995	9 Months
6,000	October 14, 1996	11 Months
7,000	February 13, 1997	4 Months
8,000	July 16, 1997	5 Months
9,000	April 6, 1998	9 Months
10,000	March 29, 1999	12 Months
11,000	May 3, 1999	1 Month
12,000	October 19, 2006	7 Years 5 Months
13,000	April 25, 2007	6 Months
14,000	July 17,2007	3 Months
15,000	?	?

History of the Securities and Exchange Commission
Finally, an overview of American stock market history would not be complete without a mention of the Securities and Exchange Commission. The beginnings of the Securities and Exchange Commission, or SEC, dates back to the Great Crash of 1929, and the reforms that followed. Before that time, there was little need or support for regulation of the securities markets.

During the crash, not only did individual investors lose countless fortunes, the banking system collapsed too. Banks were invested heavily in the market, and the ensuing panic after the crash caused many people to pull money from their savings accounts, forcing many banks to close.

In an attempt to restore faith in capital markets, Congress passed the Securities Act of 1933 and the Securities and Exchange Act of 1934. In 1934, the Securities and Exchange Commission was established to enforce those same securities laws passed by Congress.

The Real Merchants of Venice
The moneylenders of Europe filled important gaps left by the larger banks. Moneylenders traded debts between each other; a lender looking to unload a high-risk, high-interest loan might exchange it for a different loan with another lender. These lenders also bought government debt issues. As the natural evolution of their business continued, the lenders began to sell debt issues to customers - the first individual investors.

In the 1300s, the Venetians were the leaders in the field and the first to start trading the securities from other governments. They would carry slates with information on the various issues for sale and meet with clients, much like a broker does today..)

The First Stock Exchange - Sans the Stock
Belgium boasted a stock exchange as far back as 1531, in Antwerp. Brokers and moneylenders would meet there to deal in business, government and even individual debt issues. It is odd to think of a stock exchange that dealt exclusively in promissory notes and bonds, but in the 1500s there were no real stocks. There were many flavors of business-financier partnerships that produced income like stocks do, but there was no official share that changed hands.

All Those East India Companies
In the 1600s, the Dutch, British, and French governments all gave charters to companies with East India in their names. On the cusp of imperialism's high point, it seems like everyone had a stake in the profits from the East Indies and Asia except the people living there. Sea voyages that brought back goods from the East were extremely risky - on top of Barbary pirates, there were the more common risks of weather and poor navigation.

In order to lessen the risk of a lost ship ruining their fortunes, ship owners had long been in the practice of seeking investors who would put up money for the voyage - outfitting the ship and crew in return for a percentage of the proceeds if the voyage was successful. These early limited liability companies often lasted for only a single voyage. They were then dissolved, and a new one was created for the next voyage. Investors spread their risk by investing in several different ventures at the same time, thereby playing the odds against all of them ending in disaster.

When the East India companies formed, they changed the way business was done. These companies had stocks that would pay dividends on all the proceeds from all the voyages the companies undertook, rather than going voyage by voyage. These were the first modern joint. This allowed the companies to demand more for their shares and build larger fleets. The size of the companies, combined with royal charters forbidding competition, meant huge profits for investors.

A Little Stock With Your Coffee?
Because the shares in the various East India companies were issued on paper, investors could sell the papers to other investors. Unfortunately, there was no stock exchange in existence, so the investor would have to track down a broker to carry out a trade. In England, most brokers and investors did their business in the various coffee shops around London. Debt issues and shares for sale were written up and posted on the shops' doors or mailed as a newsletter.

The South Seas Bubble Bursts
The British East India Company had one of the biggest competitive advantages in financial history - a government-backed monopoly. When the investors began to receive huge dividends and sell their shares for fortunes, other investors were hungry for a piece of the action. The budding financial boom in England came so quickly that were no rules or regulations for the issuing of shares. The South Seas Company (SSC) emerged with a similar charter from the king and its shares, and the numerous re-issues, sold as soon as they were listed. Before the first ship ever left the harbor, the SSC had used its new-found investor fortune to open posh offices in the best parts of London.

Encouraged by the success of the SSC and realizing that the company hadn't done a thing except issue shares, other "businessmen" rushed in to offer new shares in their own ventures. Some of these were as ludicrous as reclaiming the sunshine from vegetables or, better yet, a company promising investors shares in an undertaking of such vast importance that they couldn't be revealed. They all sold. Before we pat ourselves on the back for how far we've come, remember that these blind pools still exist today.

Inevitably, the bubble burst when the SSC failed to pay any dividends off its meager profits, highlighting the difference between these new share issues and the British East India Company. The subsequent crash caused the government to outlaw the issuing of shares - the ban held until 1825.

The New Kid on the Block
The Nasdaq was the brainchild of the National Association of Securities Dealers (NASD) - now called the Financial Industry Regulatory Authority (FINRA). From its inception, it has been a different type of stock exchange. It does not inhabit a physical space, as with 11 Wall Street. Instead, it is a network of computers that execute trades electronically.

The introduction of an electronic exchange made trades more efficient and reduced the bid-ask spread - a spread the NYSE wasn't above profiting from. The competition from Nasdaq has forced the NYSE to evolve, both by listing itself and by merging with Euronext to form the first trans-Atlantic exchange.

The Future: World Parity ?
The NYSE is still the largest and, arguably, most powerful stock exchange in the world. The Nasdaq has more companies listed, but the NYSE has a market capitalization that is larger than Tokyo, London and the Nasdaq combined - and the merger with Euronext will make it larger still. The NYSE, once closely tied to the fortunes of failures of the American economy, is now global. Although the other stock exchanges in the world have grown stronger through mergers and the development of their domestic economies, it is difficult to see how any of them will dislodge the 800-pound gorilla that is the New York Stock Exchange.

Market Structure in other Countries :- The structure of securities markets varies considerably from one country to another. A full cross country comparison is far beyond the scope of this text. Therefore we will instead briefly review three of the Biggest non-U.S Stock markets. They are,

1.The London,
2.Euronext, and
3.Tokyo Exchanges.

1.LONDON :-
The world's oldest stock exchange and one of the top three stock exchanges in the world. Lists around 3000 companies. Total equity turnover value of more than Ј3.5 billion.

A stock exchange provides facilities for stock brokers and traders to trade stocks, securities and other financial instruments.

Generally facilities are also provided for the issue and redemption of securities as well as other capital events including the payment of income and dividends.

To be able to trade a security on a certain stock exchange, it has to be listed there.

The stock markets can be both real and virtual. The stock exchanges with physical locations carry out the stock trading on trading floor.

In case of the virtual stock exchanges, the entire trading is done online.

Supply and demand in stock markets is driven by various factors which affect the price of stocks.

World stock exchanges are very complex and affected by local events though integration and flow of funds internationally has raised the expertise of stock exchanges in the respective countries.

Each of the international exchanges has different qualifications for listings and offers different stocks and securities.

The London stock Exchange uses an Electronic trading system dubbed SETS ( STOCK EXCHANGE ELECTRONIC TRADING SYSTEM ) for Trading in Large liquid securities. This is an electronic clearing system similar to ECNs in which buy and sell orders are submitted via computer networks and any buy and sell orders that can be crossed are executed automatically. However, less liquid shares are traded in a more traditional dealer market called as the SEAQ ( STOCK EXCHANGE AUTOMATED QUOTATIONS ) system, where market makers enter Bid and ask prices at which they are willing to Transact.

2.EURONEXT :-
Euronext was formed in 2000 by a merger of the Paris, Amsterdam, and Brussels Exchanges and itself merged with the NYSE Group in 2007, Euronext like most European exchanges , uses an electronic trading system. Its system called NSC ( for nouveau systeme de cotation or New Quotation System ) has fully automated order routing and execution. In fact, investors can enter their orders directly without contacting their Brokers. An Order submitted to the System is executed immediately if it can be crossed against an order in the public limit order book, if it cannot be executed, it is entered into the limit order book.

Euronext has established cross trading agreements with several other European exchanges such as Helsinki or Luxembourg. In 2001, it also purchased LIFFE, The London International Financial Futures and Options Exchanges.

3.TOKYO :-
The Tokyo Stock Exchange (TSE ) is another Largest in the World, measured either by trading volume or the market capitalization of its roughly 2400 listed firms. It exemplifies many of the general Trends that we have seen affecting stock markets throughout the World. In 1999, it cleared its trading flour and switched to all- electronic Trading. Its switched from a membership form of Organization to a Corporate form in 2001.

The second largest stock exchange market in the world by market value. Lists 2,271 domestic companies and 31 foreign companies, with a total market capitalization of over 5 trillion USD.

The TSE maintains three sections,
1.The first section is for large companies,
2. The second is for midsized firms and
3. The mothers section is for emerging and High Growth stocks.

About three Quarters of all listed firms trade in the Ist section and about 200 trade in the mothers section.

The two major stock market indices for the TSE are the NIKKEI 225 index, which is a price weighted average of 225 Top tier Japanese firms, and the Topic index, which is a value Weighted index of the First section companies.

Worlds first largest stock market is “New York Stock Exchange”.
Second largest is also America’s “NASDAQ Stock Exchange”.
Various stock exchanges of the World are,

AMERICA NASDAQ 100
NASDAQ COMPOSITE
NYSE U.S. 100
NYSE COMPOSITE
DOW JONES INDUSTRIALS 

DOW JONES COMPOSITE
BRITAIN FTSE 100 ( pronounced footside )
CANADA TSX
FRANCE CAC 40
GERMANY DAX
HONG KONG HANG SENG
JAPAN NIKKEI 225

Long term returns from different countries’ stock markets

	Equities		Bonds
	Annualized real return	Cumulative since  1900	Annualized real return	Cumulative since 1900
Australia	7.2%	2,459	1.6%	5.7
Belgium	2.4%	14	-0.1%	0.9
Canada	5.7%	492	2.2%	11.7
Denmark	4.9%	202	3.2%	33.2
Finland	5.0%	237	-0.2%	0.8
France	2.9%	24	-0.1%	.89
Germany	2.9%	24	-1.8%	0.14
Ireland	3.7%	60	0.9%	2.8
Italy	1.7%	6	-1.7%	0.14
Japan	3.6%	53	-1.1%	0.30
Netherlands	4.8%	193	1.5%	5.4
N. Zealand	5.8%	531	2.1%	10.5
Norway	4.1%	88	1.8%	7.5
S. Africa	7.2%	2,440	1.8%	7.2
Spain	3.4%	43	1.3%	4.3
Sweden	6.1%	765	2.6%	17
Switzerland	4.1%	93	2.2%	11.4
U.K.	5.2%	291	1.5%	5.4
U.S.A.	6.2%	834	2.0%	9.3
World	5.4%	344	1.7%	7

O.FOREIGN EXCHANGE

What is Forex Trading ?
For­eign Exchange is usu­ally termed as Forex. Foreign exchange is the buying and the selling of foreign exchange in pairs of currencies. For example you may buy US dollars and sell Euros or you buy UK Pounds Sterling and sell Japanese Yen. Currencies are bought and sold because governments and companies need foreign exchange for their purchase of and payments for various commodities and services.

Forex / Currency Trad­ing is trad­ing in cur­ren­cies of var­i­ous coun­tries in order to make prof­its. Cur­ren­cies are always traded in pairs mean­ing you can trade in two cur­ren­cies at a time.

You buy one cur­rency and sell another cur­rency. The most traded cur­rency pairs are USD / JPY, GBP / USD AND EURO / USD. The first cur­rency of the pair is called as the base cur­rency.

Buy­ing GBP / USD means you are buy­ing GBP and sell­ing USD. Sim­i­larly sell­ing EURO / USD means you are sell­ing EURO and buy­ing USD.

How to trade in currency / foreign exchange ?

Big money can be made through trad­ing in forex. The rea­son being the mar­gin money require­ment is only 5% of the total trade.

For exam­ple – If you have Rs 1000 in your account, you can take posi­tions on Rs 20,000 (1000*100/5). This means a per­son can take a very large posi­tion in the mar­ket with a small amount.

Let’s under­stand this con­cept by an exam­ple – If one wants to trade in pound and have a cap­i­tal of Rs 75000.

If 1 pound = Rs 75
Lot size is 1000
Total expo­sure = 75000*100 / 5 = Rs 14, 80,000
Case 1 – If the rupee depre­ci­ates by Rs 1, 1 Pound = Rs 76
Trader incur a loss of Rs 1000*10 = Rs 10,000
Case 1 – If the rupee appre­ci­ates by Rs 1, 1 Pound = Rs 74
Trader incur a profit of Rs 1000*10 = Rs 10,000

With rise or fall in cur­rency one can either make money or lose money. Traders should always note there is huge poten­tial of money to be made and the risk is quite high as well.

Investment in cur­rency futures is based on the risk appetite. Ide­ally a small investor should not have expo­sure to this form of instruments.

Forex Trad­ing in India !
At present, deriv­a­tive prod­ucts (futures & options) are avail­able only in four major cur­ren­cies – Dol­lar, Euro, Pound and Yen. These are offered by National Stock Exchange and Multi– Com­mod­ity Stock exchanges.

When someone mentions Foreign Exchange (Forex) market, the usual image that immediately comes to mind is a person waiting behind a counter while a clerk just behind the parting glass counts and changes your local currency into US Dollars.

At some point either when traveling or making an overseas purchase, most people would have in some way participated in the FX market. However, it is more than currency conversion. Increasingly many are now turning to the FX market for the purposes of speculation or dealing at prices formerly only available to financial institutions.

So what is Foregn Exchange all about ?
As defined in The Economist's Guide to Financial Markets, foreign exchange, more popularly referred to as "forex" is a worldwide decentralized over-the-counter financial market for the trading of currencies, wherein financial centers around the globe serves as anchors of trading between a wide range of different types of buyers and sellers 24 hours a day, five days a week.

According to The Economist, foreign exchange market is arguably the world's largest market place. It has an average daily turnover of US$1.9 trillion, with some other sources such as go Market’s Introduction to Foreign Exchange estimating the market to have an average daily turnover in excess of US $ 4 trillion. The Bank for International Settlements says that average daily turnover in global foreign exchange markets is estimated at $3.98 trillion as of April 2010, which is a growth of more or less 20% over the $3.21 trillion daily volume in the same month back in 2007. Bottom-line is foreign exchange has a huge turnover.

One of the prime advantages to trading foreign exchange is the sheer volume of geographically dispersed market participants. This in turn creates liquidity which cannot be matched by any regulated exchange-traded product or instrument.

According to a Wikipedia entry, this liquidity unique to foreign exchange markets along with other characteristics is the reason why it has been referred as the closest ideal of perfect competition.

Now that you know what Foreign Exchange market is all about, you might ask:

How do you trade in Forex ?
In theory the buying and selling of currencies is extremely simple. A trader can buy low, sell high and vice- versa. However, in practice learning the basics is essential before putting your hard earned cash on the line.

This type of trade is thought to constitute about 5% of all currency transactions, with the remaining 95% currency transactions being undertaken for speculation and trade. Companies will also buy and sell foreign currency in order to hedge against exchange rate risks, and to protect their financial investments. The exchange rates in foreign exchange markets also vary continuously and on daily basis, so need to be tracked to make optimal exchange decisions.

Approximately 85% of the trading is done in only US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. This is because they are the most liquid of foreign currencies (i.e. they can be easily bought and sold.) In fact the US Dollar is the most recognizable foreign currency even in countries like Afghanistan, Iraq and Vietnam. Other currencies may not be as liquid, possibly due to exchange controls or political instability, or may be prone to inflation. Then there are others which are pegged to another major currency (usually the US Dollar) and which will therefore track exactly the fortunes of the currency they are pegged to.

The currency trading market is a true 24 hour market with trading being passed from East to West through the trading day. The market opens first in the financial centers of Sydney, moving to Tokyo, London and New York in that sequence through the day.

Investors and speculators can then easily respond to the ever-changing situations and can buy and sell currencies simultaneously if they so wish. In fact many operate in two or more currency markets using arbitrage to gain profits (buying in one market and selling in another market or vice versa to take advantage of the prices and book profits).

There are again various factors which affect the currency markets, and whole areas of scientific analysis have been developed to study the effect of these, such as Technical Analysis and Fundamental Analysis. Both of these tools are used for analyzing a variety of markets such as equity markets, stock markets, mutual funds markets etc.

Technical Analysis refers to reading, summarizing and analyzing data based on the data that is generated by the market. Fundamental Analysis refers to the factors which influence the overall market economy, and in turn how these affect the currency trading markets.

Of course there are other economic and non economic factors which can suddenly affect the trading of the Forex markets such as the 9/11 tragedy, currency devaluations and larger trades placed by national banks, hedge funds etc. Currency markets can therefore be extremely volatile and unpredictable and can also move very fast. This, coupled with the fact that investors typically trade currencies on a highly leveraged basis means that currency trading has the potential for high returns but also for large losses.

Disclaimer
Forex Trading is a very high risk / high reward finan­cial instrument. Trad­ing in For­eign Exchange should be traded only with risk cap­i­tal. Do remem­ber no assured prof­its in forex trading.

From the above and much more..,nothing can give profitable gains when compared to Stocks. Above mentioned each and everyone has their own advantages and Disadvantages.

But, Investing in stocks can enhance number of people’s lives. Right from the Fund Manager, maintaining several millions, to the newly entering investor , everyone’s dream is to make profitable gains. Some succeed and many others fail?

What makes the difference? Is it a chance ( Luck ) or knowledge based one?
As said by Richard Templar, in his Book “ THE RULES OF WEALTH “ the most common fact about money is, It doesn’t differentiates people regarding, Your complexion, Your community, Your sub-caste, Your religion, What your parents were doing etc… and all those things.

It also never minds what you are thinking about yourself. Every day like a Blackboard it starts its Day. Likewise how others are having their own rights to earn, the same kind of opportunities are also left to you. The only Blocking fact is you, and your views about money.

Money doesn’t minds who is handling it, their qualities, their Wishes, they belong to which team etc It has no eyes, no ears, no sentiments A mere dead fine paper with no feelings It has been created, to be used by us, Spent by us, to invest, to struggle, to work for it, etc.

Many rich personalities hold certain rules in earning money. But the common character between them is nothing.

As far as human lives are concerned the need for money had created a rapid change in them. Right from Prime minister to peon and Minister to menial it is common to everyone.

MONEY SAVING !
Generally people of Japan, China, and India largely hold the tendency of saving money routinely. Many proverbs are found regarding Savings. Suppose one is able to control their expenses within their Earnings, they may be able to save money.

As told by a Old proverb 1 Rupee saved is equivalent to 1 Rupees earned Still now i can’t understand its meaning. Can you? We everyone are Earning. Many of us doing Business, some engaged in service oriented works, doing jobs, some exerted to self employment etc, suit to their needs , potential and likes If an attractive income gains are there , sufficient to maintain their family needs, then they may be able to save money.

Some may have deficit in Earning. They may not be able to maintain their needs.

IS SAVING ALONE SUFFICIENT ?
Saving money is a good habit! But is it alone sufficient? No, proper returns must also be obtained To achieve proper returns, smart investments may be made. As to how we are doing our job, our investments also need proper growth depending upon the time limit, and the type of Investment.

IS THE GROWTH ASSURED ?
Many people deposit money in Banks, for secured growth in certain years Some in lands as real Estates, Agricultural lands as fixed assets, few people in Ornaments like Gold, Silver, etc suit to their mentality and urgent needs

# According to a journal, in 1992, an ounce of silver costing 4.73 dollars, the least value occurred ever before Warren Buffet, purchased a huge quantity of Silver after a slight increase, and sold at 10 dollars, by the end of 2006, and gained 100 % pure profit.

Similar instances may be found then and there…!

Why to Invest in Stocks ?
Stocks are but one of many possible ways to invest your hard-earned money. Why choose stocks instead of other options, such as bonds, rare coins, or antique sports cars, Etc?

Quite simply, the reason that savvy investors invest in stocks is that they have historically provided the highest potential returns.

And over the long term, no other type of investment tends to perform better.

WHY TO INVEST IN STOCK MARKET ?
#   We can Invest as we Desire.
#   Only Investment in India with no Encumbrance.
#   Nobody can Encroach.
#   Secured.
#   Requires only less money, unlike buying property and Mortgages etc
#   Requires minimal time to trade or to purchase for Long term
     investments
#   No Capital gains tax ( If holding more than 12 months )
#   More possibilities to gain profits from the Stock market, apart from other sources
#   Easy liquidity, can be en-cashed quickly.

N.OPTIONS

WHAT IS OPTIONS IN STOCK MARKET ? 
An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. An option, just like a stock or bond, is a security. It is also a binding contract with strictly defined terms and properties.

STILL CONFUSED?
The idea behind an option is present in many everyday situations. Say, for example, that you discover a house that you'd love to purchase.
Unfortunately, you won't have the cash to buy it for another three months. You talk to the owner and negotiate a deal that gives you an option to buy the house in three months for a price of Rs.20,00,000. The owner agrees, but for this option, you pay a price of Rs.5,000.Now, consider two theoretical situations that might arise: 

1. It's discovered that the house is actually the true birthplace of Elvis! As a result, the market value of the house skyrockets to $1 million. Because the owner sold you the option, he is obligated to sell you the house for $200,000. In the end, you stand to make a profit of $797,000 ($1 million - $200,000 - $3,000). 

2. While touring the house, you discover not only that the walls are chock-full of asbestos, but also that the ghost of Henry VII haunts the master bedroom; furthermore, a family of super-intelligent rats have built a fortress in the basement. Though you originally thought you had found the house of your dreams, you now consider it worthless. On the upside, because you bought an option, you are under no obligation to go through with the sale. Of course, you still lose the $3,000 price of the option.

This example demonstrates two very important points ! 

First, when you buy an option, you have a right but not an obligation to do something. You can always let the expiration date go by, at which point the option becomes worthless. If this happens, you lose 100% of your investment, which is the money you used to pay for the option. 

Second, an option is merely a contract that deals with an underlying asset. For this reason, options are called derivatives, which means an option derives its value from something else. In our example, the house is the underlying asset. Most of the time, the underlying asset is a stock or an index. 

Calls and Puts
The two types of options are calls and puts:

A call gives the holder the right to buy an asset at a certain price within a specific period of time. Calls are similar to having a long position on a stock. Buyers of calls hope that the stock will increase substantially before the option expires.

FXCM -Online Currency Trading Free $50,000 Practice Account
A put gives the holder the right to sell an asset at a certain price within a specific period of time. Puts are very similar to having a short position on a stock. Buyers of puts hope that the price of the stock will fall before the option expires.

Participants in the Options Market
There are four types of participants in options markets depending on the position they take: 
1. Buyers of calls

2. Sellers of calls
3. Buyers of puts
4. Sellers of puts

People who buy options are called holders and those who sell options are called writers; furthermore, buyers are said to have long positions, and sellers are said to have short positions.

Here is the important distinction between buyers and sellers:
-Call holders and put holders (buyers) are not obligated to buy or sell. They have the choice to exercise their rights if they choose.
-Call writers and put writers (sellers), however, are obligated to buy or sell. This means that a seller may be required to make good on a promise to buy or sell.

Don't worry if this seems confusing - it is. For this reason we are going to look at options from the point of view of the buyer. Selling options is more complicated and can be even riskier. At this point, it is sufficient to understand that there are two sides of an options contract.

The Lingo 
To trade options, you'll have to know the terminology associated with the options market.

The price at which an underlying stock can be purchased or sold is called the strike price. This is the price a stock price must go above (for calls) or go below (for puts) before a position can be exercised for a profit. All of this must occur before the expiration date.

An option that is traded on a national options exchange such as the Chicago Board Options Exchange (CBOE) is known as a listed option. These have fixed strike prices and expiration dates. Each listed option represents 100 shares of company stock (known as a contract).

For call options, the option is said to be in-the-money if the share price is above the strike price. A put option is in-the-money when the share price is below the strike price. The amount by which an option is in-the-money is referred to as intrinsic value.

The total cost (the price) of an option is called the premium. This price is determined by factors including the stock price, strike price, time remaining until expiration (time value) and volatility. Because of all these factors, determining the premium of an option is complicated and beyond the scope of this tutorial 

There are two main types of options:
#  American options can be exercised at any time between the date of purchase and the
    expiration date. The example about Cory's Tequila Co. is an example of the use of an
    American option. Most exchange-traded options are of this type.

#  European options are different from American options in that they can only be 
    exercised at the end of their lives.

The distinction between American and European options has nothing to do with geographic location.

Long-Term Options 
So far we've only discussed options in a short-term context. There are also options with holding times of one, two or multiple years, which may be more appealing for long-term investors.

These options are called long-term equity anticipation securities (LEAPS). By providing opportunities to control and manage risk or even to speculate, LEAPS are virtually identical to regular options. LEAPS, however, provide these opportunities for much longer periods of time. Although they are not available on all stocks, LEAPS are available on most widely held issues. 

Exotic Options 
The simple calls and puts we've discussed are sometimes referred to as plain vanilla options. Even though the subject of options can be difficult to understand at first, these plain vanilla options are as easy as it gets!

Because of the versatility of options, there are many types and variations of options. Non-standard options are called exotic options, which are either variations on the payoff profiles of the plain vanilla options or are wholly different products with "option-ality" embedded in them. (To learn more, see Becoming Fluent In Options And Futures and What's the difference between a regular option and an exotic option?) 

There are two main reasons why an investor would use options: to speculate and to hedge.

Speculation 
You can think of speculation as betting on the movement of a security. The advantage of options is that you aren't limited to making a profit only when the market goes up. Because of the versatility of options, you can also make money when the market goes down or even sideways.

Speculation is the territory in which the big money is made - and lost. The use of options in this manner is the reason options have the reputation of being risky. This is because when you buy an option, you have to be correct in determining not only the direction of the stock's movement, but also the magnitude and the timing of this movement. To succeed, you must correctly predict whether a stock will go up or down, and you have to be right about how much the price will change as well as the time frame it will take for all this to happen. And don't forget commissions! The combinations of these factors means the odds are stacked against you. 

So why do people speculate with options if the odds are so skewed? Aside from versatility, it's all about using leverage. When you are controlling 100 shares with one contract, it doesn't take much of a price movement to generate substantial profits.

Hedging 
The other function of options is hedging. Think of this as an insurance policy. Just as you insure your house or car, options can be used to insure your investments against a downturn. Critics of options say that if you are so unsure of your stock pick that you need a hedge, you shouldn't make the investment. On the other hand, there is no doubt that hedging strategies can be useful, especially for large institutions. Even the individual investor can benefit. Imagine that you wanted to take advantage of technology stocks and their upside, but say you also wanted to limit any losses. By using options, you would be able to restrict your downside while enjoying the full upside in a cost-effective way. (For more on this, see Married Puts: A Protective Relationship and A Beginner's Guide To Hedging.)

A Word on Stock Options 
Although employee stock options aren't available to everyone, this type of option could, in a way, be classified as a third reason for using options. Many companies use stock options as a way to attract and to keep talented employees, especially management. They are similar to regular stock options in that the holder has the right but not the obligation to purchase company stock. The contract, however, is between the holder and the company, whereas a normal option is a contract between two parties that are completely unrelated to the company. (To learn more, see The "True" Cost Of Stock Options.)