What is a stock? How it can earn and how it trades

A stock is a certificate of ownership in a company. Holders may earn from price changes and dividends, and also bear the risk of falling prices and of the company’s performance.

Updated：2026-11-15

What a stock is

To raise funds, a company splits its ownership into many pieces, and each piece is a share. Holding shares makes you a shareholder, owning a part of the company.

What returns holding may bring

• Price gains: the difference when you sell above your purchase price.
• Dividends: the company distributes earnings, as cash dividends, stock dividends or both (see “Dividend yield and dividend policy”).

Neither is guaranteed: prices can fall and a company may pay no dividend.

How Taiwan stocks trade

1. Open a securities account and a bank account for settlement (see “What is a settlement account?”).
2. During trading hours, place an order through a broker (see “Market orders versus limit orders”).
3. After a trade, settlement follows the set schedule: you pay for purchases and receive proceeds from sales.

The unit is a “lot” of 1,000 shares, and you can also trade odd lots (see “What are odd lots?”). Both TWSE-listed and TPEx-listed stocks are matched during the session by price and time priority.

Why prices move

A stock price is the price at which buyers and sellers trade. The company’s earnings and outlook, the economy, interest rates, and market funds and sentiment all affect what people will pay, so prices change every day.

Keep in mind

• Buying stocks involves risk and you may lose principal.
• Understand the terms and how much volatility you can bear first.

This article only explains terms. Tenmizu does not provide investment recommendations and this is not investment advice.