A joint-stock company is a form of corporation that acquires legal personality from the date of its incorporation and is commonly used for the conduct of business. The company's share capital consists of the total contributions of its shareholders. The shares can be publicly traded, which provides an incentive for investors needed for further business development. At the time of the incorporation of the company, the shareholders can declare it a closed company, which means that shares can be transferred to any person, but the current shareholders must have a prior disclaimer. At the time of incorporation, shares may be issued in a variety of forms, including bearer, registered, or preferred.
Functions of a joint-stock company The ultimate goal of all businesses is to run a business and make a profit. A joint-stock company is a useful type of company for attracting investors and additional funding in return for the investor receiving shares that give the right to dividends. Stock corporations often grow into large corporations. They are most commonly found in the financial services sector – credit institutions, banks, insurance companies and other payment and financial institutions are very often public companies. These companies obviously need financial stability and plentiful funds in an emergency. Utilization of a trading account While a cash account determines that you can place a trade using only the amount of funds that are in your account, a margin account, on the other hand, involves a line of credit offered by your broker and you can use it to enter more positions that exceed your actual cash balance. When using a margin there is an interest applied for positions held overnight. If interested in margin, the brokerage could offer you several levels of leverage depending on size of your account. For example, if you hold 10,000 USD, leverage of 2:1 would allow you to purchase securities with total value of 20,000 USD. Also, it must be pointed out that in the same manner as higher profits are reachable, you are also subjected to higher losses that can even surpass your initial investment.
Advantages & disadvantages of trading accounts When discussing advantages of trading account it is worth mentioning that this type of account is relatively easy to open online, which means that you are not subject to geographical constraints of your location.
Advantages There are a large number of online brokerage companies offering various types of trading accounts and it is up to you to find the most suitable one for your needs. In addition to being easy to set up and access over online if needed, all assets in trading account are held electronically, which means no physical transaction is taking place.
If used with caution, margin can give you huge advantage in terms of profit when executing trades from your trading account. In addition, many brokerages offer different tools to make sure you are making the correct investment decision, as well as help traders to avoid emotionally based trades. Trading account offers another benefit: the possibility to keep and trade variety of different financial instruments in the same account. Although, some traders chose to open multiple accounts and keep each class of financial instruments in separate accounts.
Disadvantages Nevertheless, worth remembering is the fact, that since the trading account allows gaining higher returns than investing accounts, also the risk of losing is greater and may exceed your initial investment. Potential high profits are pretty attractive, but you should also remember about the risks.