Stock market is a financial market. Traders can access various shares of companies to trade and make profits. The market capitalization of the stock market is massive making it one of the best choices for financial traders.

But, do you know how many types of stocks you can trade? No. Then here's a brief discussion on types of stocks available in the stock ma rket and how traders can trade them for a successful and diversified trading journey.

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Classification of Stocks

In the Indian market, stocks are classified on various bases. The different types of stocks offer traders with great options to trade and earn profits from. Many of these we have heard of as references or in blogs.

There are in total 19 types of stocks that traders can trade in. Here is the list:

  1. Common stock
  2. Preferred stock
  3. Large cap stocks
  4. Mid cap stocks
  5. Small cap stocks
  6. Domestic stock
  7. International stocks
  8. Growth stocks
  9. Value stocks
  10. IPO stocks
  11. Dividend stocks
  12. Non-dividend stocks
  13. Income stocks
  14. Cyclical stocks
  15. Non-cyclical stocks
  16. Safe stocks
  17. ESG stocks
  18. Blue chip stocks
  19. Penny stocks

We'll be discussing these in short for readers to have basic ideas about them. So, let's dive into the details.

Common stock and Preferred stock

Common stocks are also common among traders as most of the stocks that traders trade are called common stocks. The stock represents partial ownership in the company. The shareholders of common stock get the right to have a proportional share of assets remaining in case of liquidity.

Preferred stock gives traders preference over the common stock shareholders. They get a certain amount of money in case the company dissolves. Also, they have the right to receive dividend payments.

This is the difference between common and preferred stocks.

Large Cap, Mid Cap and Small Cap Stocks

Stocks categorised on the basis of their total worth that is their market capitalization come under this type of stocks.

Companies with large market capitalization are large cap stocks, companies with medium market capitalization are mid cap stocks and companies with small market capitalization are known as small cap stocks.

Domestic and International Stocks

Stocks classified on the basis of their location come under this category. Stocks in India will come under domestic stocks while stocks abroad will be international stocks.

Growth Stocks and Value Stocks

Another significant type of stocks are growth and value stocks. Growth stock traders look for companies that have sales and profits rise quickly. While value stock traders go for less expensive shares.

Growth stocks are risky but have high potential returns but value stocks are a conservative investment.

Initial Public Offering (IPO)

Initial public offerings are the stocks that the company has recently gone public with. These are introduced in the primary market.

Dividend and Non-Dividend Stocks

Many stocks in the market are dividend and non-dividend stocks. The dividend is a payment that a company provides to their shareholders on the basis of profit generation. A dividend stock provides a dividend while non-dividend stocks do not.

Income Stocks

Income stocks is another name given to dividend stocks. The income to traders in shares comes out in form of dividend therefore, the stocks are known as income stocks.

Cyclical and Non-Cyclical Stocks

Cyclical stocks are shares of companies operating in industries such as manufacturing, travel, luxury goods and others. While the non-cyclical stocks belong to products not much in demand like grocery store chains.

Safe Stocks

Safe stocks are those that are relatively low risk stocks. The movements of shares are small in comparison to other overall stock markets.

ESG Stocks

ESG stocks belong to the category of the investment philosophy that emphasis on environmental, governance and social related concerns. Thus, the company considers other collateral impacts on the environment, shareholder rights and company employees.

Blue Chip Stocks

Blue chip stocks are the stock of a company that comes from a well established and known company. These stocks have a strong history of performance and pay dividends.

Penny Stocks

A penny stock is the common stock valued at less then one dollar. The stocks are highly speculative and traders can trade them easily.

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Conclusion

The article has in short mentioned all the categories of stocks. Traders can buy and sell these stocks to earn profits from the market. A trader can choose suitable stocks that will support them in making efficient trades.

Common stock, preferred stock, penny stocks, blue chip stocks, growth or value stocks traders have a total of 19 types of stocks to select from and trade. So, choose suitable stock and make great trades. 

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