There appears to be an on-going bit of confusion when it comes to buying and selling shares on this forum and who benefits from those exchanges.
To be clear: The only time you
BUY shares
FROM the company is when they initially list their shares on the Market. This occurs during their
Initial Public Offering (IPO). After those shares are bought they go into the hands of institutionals owners such as Banks, Hedge Funds, ETFs etc, as well as Average Joes .
After this occurs the shares are literally traded back and forth between the same groups opting to come in and purchase shares and from those opting to leave / sell shares.
The only exception to the above is when the Company does a
Private Placement (Issuing Additional Shares to sell directing to Private Investors) or when a
At-The-Market (ATM) Share Block is created where the company itself can sell shares directly on the open market.
During the "normal" process of buying and selling shares the company itself does not benefit outside of the scenarios noted above.
Shares can be issued to insiders as compensation however if they should sell those shares on the market the Company again does not benefit. The benefit / cash transfer goes to the Insider for whatever price they opted to sell for. Insiders can buy shares off the open market as well and when this occurs, they themselves are purchasing shares from a seller (whoever that may be at the time).
Day-Trades / Swing-Traders / Investors (Long Positions) These groups benefit when they can purchase shares at one price then sell them later for more. This sort of trading is called
Long Position Trading / Investing (regardless of the time between the Buy / Sell orders going through.
Some individuals do this sort of investing over short periods of time while others do it over extended time periods. Those who use long time-frames often opt to use what is called a
Dollar Cost Average Strategy which relies on repeat Buying with smaller blocks of cash (relative to their total budget) over months or years before they consider Selling. The selling cycle would again be done over long periods of time with only portions of the shares going out on each trade.
Short Position Traders Short Position Trading involves the borrowing of Shares at one price then selling them on the open market with the intention to re-buy the shares (
cover) at a lower price in order to replace the borrowed shares and pocket the difference for a profit.
Stock Shorting in the Cannabis Sector is blamed for much of the price supression with some Hedge Funds now being investigated by the
Department of Justice (DOJ) and
Security Exchange Commission (SEC) for illegal trading practices (Google: "
SEC DOJ Short Seller Investigation" for more information).
This sort of trading is the highest risk trade available on the StockMarket as losses are literally unlimited. Those holding these trades face the risk of the SharePrice increasing which is how their trades turn negative and losses begin to accumulate. As there is virtually no cap on how high a shareprice can go the losses faced by Short-Position traders face is also unlimited.
Googling these Topics will aid in understaning how the different trades work: What is Dollar Cost Average Investing
How does a stock short position differ from a long position
What is short position covering
What is a stock short squeeze
What is a stock gamma squeeze
I will add a personal comment here. If you were to sit to a table to play a game of cards for money, would you or would you not at least want to know the rules and how the game is played? I would highly suggest you get to know how money is made and how money is lost.
Along the same topic of "Learning" I would also suggest getting to know what a "
Short and Distort" is and how it differs from a "
Pump and Dump". Both of these "
strategies" rely on providing
inaccurate information to investors in order to lead them into either Selling or Buying at the wrong time.
TO BE MISLEAD SOMEONE EITHER WANTS YOUR SHARES OR THEY WANT YOUR CASH.
Make no mistake -> If they are after your shares then they are worth more than you think.
Don't be mislead -> Do Your Own Research.
If it looks interesting on a Forum -> Research it before you trade.