Stocks are bought and sold on the stock market, bringing together buyers and sellers of listed company stocks。The stock market works a bit like an auction, where potential buyers state the highest price they are willing to pay ("bid") and potential sellers state the lowest price they are willing to accept ("ask price").。The actual execution of the transaction price will be located between or between the bid price and the ask price.。

Transactions can be made by stockbrokers, usually on behalf of portfolio managers or like individual investors.。In the United States, the stock market consists of 13 exchanges, the most famous of which are the New York Stock Exchange and the Nasdaq Stock Exchange.。

Stock MarketThe main function of

The stock market is where the public can access shares of listed companies and functions a bit like a farmers' market, where buyers and sellers gather in one place to exchange items。But the stock market is much more complex and more regulated, and prices can change quickly。Here are three main activities in the stock market:

• Stock buying: both everyday retail investors and established institutional investors can buy company shares。
• Stock Sales: There are buyers and sellers for every stock transaction。
• Issuance of shares: If a private company wants to raise capital, it may agree to sell part of its ownership in the stock market, which is what happens during an initial public offering ("IPO")。If an existing public company wants to raise capital, it can do so through a secondary public offering.。In both cases, after the shares are issued, the public can buy or sell。

Stocks are not the only things that can be bought and sold on the stock market, other "securities," such as exchange-traded funds (ETFs) or real estate investment trusts, are also traded on the stock market (although some details of how they are priced or traded differ).。

Is the stock market risky?？

Yes。If you invest in the stock market, be sure to pay attention to short-term and long-term risks。Stock prices can go up or down。A fall in the stock price to $0 could result in a total loss of investment。Given this risk, investors should develop well-thought-out strategies to guide decision-making。

What does "stock market" mean?？

Shares of thousands of companies are traded on the stock market。To get an idea of what's happening to a stock in general at any given time, you'll notice that people often look at stock market indices such as the "Dow Jones Industrial Average" or the "S & P 500."。

The S & P 500 is the weighted average of the 500 largest publicly traded companies in the United States by market capitalization.。When the S & P 500 is up, you may hear investors say "the stock market is up"; when the S & P 500 is down, you may hear investors say "the stock market is down."。

How the Stock Market Works？

The main role of the stock market is to bring buyers and sellers together to negotiate stock transactions。To fix prices, the stock market works a bit like an auction。

• Buyers want to pay the lowest possible price。Stockbrokers who want to buy (or on behalf of customers who want to buy) can bid the price they are willing to pay for the stock, with the highest price becoming the "best bid"。
• Seller wants to sell at highest price。Stock owners or their stockbrokers can indicate their willingness to sell by proposing an asking price, which is the price at which they are willing to sell the stock, with the lowest price becoming the "best asking price."。

The difference between the best bid price and the best ask price is called the "spread."。The parties negotiate to meet in the middle, and the intermediary who executes the transaction charges the difference as a fee.。

People who follow stocks will notice stock price movements, which may change frequently depending on the number of investors wishing to buy or sell the stock and the number of transactions that occur。

Stocks are traded individually through negotiation between the bid and ask prices.。As economic, political, and specific news reports influence the movement of the entire market, prices may fluctuate along with the shares of other companies。

Who uses the stock market?？

Here are some key players you should know about:

• Retail investors can buy and sell individual stocks through brokerage accounts.。When an order is placed, the order is sent to the exchange that executes the trade。
• Stockbrokers are "registered representatives" who have been trained and passed a licensing examination to buy and sell securities on behalf of investors.。A stockbroker works for a brokerage firm, which can act as a principal or agent in a transaction, making money through mark-ups / markdowns (as a principal) or commissions (as an agent) on the transaction。Many brokerage firms charge fees to clients who use brokerage firms to place orders and execute stock trades。
• Portfolio managers place large orders to buy and sell stocks because they manage relatively large portfolios of stocks that can be owned by other investors。If you own stocks in a fund (mutual fund, pension fund, pension fund, etc.), the portfolio manager may deal with a range of underlying securities (stocks, bonds, etc.) in the fund's portfolio。
• Investment bankers help companies list shares on stock exchanges。

What are the participants in the stock market?？

Investors are the driving force of the stock market - people who want to buy and sell stocks。But between these buyers and sellers are important players who make money by providing services to investors。Here are some key elements:

• Principal: Broker-dealer firm with a portfolio of stocks willing to sell to investors and willing to buy shares from investors trying to sell them。Broker dealers, as principals, make money by adding markups to the stocks they sell and reducing the prices of the stocks they buy, a bit like car dealers adding markups to cars sold to customers。
• Agent: Linking an investor's buy or sell request to the other party to the transaction。For intermediary services, they often charge commissions。
• Stock Exchange: The New York Stock Exchange and Nasdaq are the two most famous stock exchanges in the United States, but there are actually 13。They charge a small fee for each transaction that occurs on the exchange in exchange for their services.。They also charge listing fees to companies that issue shares on exchanges。
• Custodian: Keeps your shares for you - mainly in electronic form, so there is less risk of loss, theft or misplacement。Brokerage firms typically pay custodians for such custodial services。
• Market maker: A company that is ready to buy or sell shares at an open offer, and they are willing to do anything like your partner.。
• Retail investors: individuals, not professionals, who can buy and sell stocks (or other assets) through a personal brokerage account.。

Who Regulates the Stock Market？

The stock market, while having rights, is also given significant responsibilities.。

The stock market manages trillions of dollars of wealth, so Congress gave the Securities and Exchange Commission (SEC) the power to regulate the stock market。Other countries (and states) have similar regulatory and enforcement agencies。These regulators have a broad mandate and focus on individual investors:

• Protecting investors
  Promoting equity
  Maintain market effectiveness

What are the rules of the stock market?？

Rules and requirements established by the SEC affect everyone involved in stock trading。While these rules may vary for the specific circumstances of different stock markets in different countries, the purpose is to protect the investing public through transparency, consistency and accuracy.。

• Price transparency: The stock market should ensure that participants are shown the best "bid" (the price the buyer wants to pay) and the best "ask price" (the price the seller wants to sell) in order to be fair.。
• Confirmation: If you are a brokerage client trading shares on the stock market, you are entitled to a trade confirmation showing key details of the trade, including the time the trade was made, the final price you paid, and (if your broker charges a fee) the specific commission or mark-up / cut charged to you。
• Qualifying examination: stock traders are licensed by FINRA, a self-regulatory organization whose members are exchanges and financial institutions。The licensing process involves serious examinations, including how the market works, etc.。For example, the Series 7 exam is designed to help ensure that brokerage professionals are well prepared and understand general financial industry rules.。
• Suspension: If trading in a stock or the market as a whole reaches a specific price or volatility limit within a certain period of time, the exchange may temporarily or throughout the day stop trading。This is a rare but serious move to help protect investors from panic trading and help restore order.。There may be other important reasons for the SEC or exchange to suspend trading。
• BIG NEWS UPDATE: The stock market may also stop stock trading when there is major breaking news, allowing investors to trade more fairly based on publicly released information (such as large acquisitions or bankruptcy filings)。This prevents certain investors from gaining an unfair information advantage。

These are some of the many detailed rules designed to make the stock market more transparent, consistent and accurate for investors.。Investor protection rules developed by regulators and self-regulatory organizations aim to provide a stable basis for the more normal functioning of the stock market and to win the trust of customers。

A key feature of modern stock markets is the existence of real-time data on prices。As investment decisions should be based on the latest information, stock exchanges are increasingly focusing on faster and more accurate pricing information。

Stock Market Example

The world's two largest stock markets by market capitalization are located in the United States: the New York Stock Exchange and Nasdaq.。There are many other well-known stock exchanges around the world, including Euronext (with markets in Amsterdam, Brussels, Dublin, Lisbon and Paris), Bombay Stock Exchange in Mumbai, TMX Group in Toronto, Deutsche Börse in Frankfurt, Shenzhen Stock Exchange, and Shanghai Stock Exchange.。

These stock markets are exchanges where companies in specific regions tend to list their shares, and global traders can also access these regional markets, and shares listed on one exchange can sometimes be traded on exchanges in other regions。

The Origin of the Stock Market

Stock markets are spread all over the world, connecting buyers and sellers of different company stocks。The concept of a company distributing its own ownership (also known as "equity") to investors and trading back hundreds of years。

In the 1600s, European explorers raised money by selling stakes in their corporate ventures, and investors would buy shares to make a profit on expedition missions, such as the company's pursuit of bringing foreign spices back to European sales.。The Dutch East India Company was one of the first to do so by issuing its own shares in exchange for future profits on the Amsterdam stock market.。The trading of these stocks formed the earliest stock market。

History of the modern stock market

The first modern stock market was in London。The combination of lack of regulation, growing consumer enthusiasm for stocks and very little public information about companies has led to significant volatility, risk and potential fraud。These misdeeds prompted the establishment of the London Stock Exchange in 1773 to provide a safe haven for more consistent and fair stock trading.。

In the United States, the first modern stock exchange was established in Philadelphia in 1790.。Two years later, under the Sycamore Agreement signed by 24 stock dealers outside Wall Street, the New York Stock Exchange (NYSE) was established.。Today, the New York Stock Exchange combines electronic and physical trading floors and is traded by artificial traders on Wall Street.。The NYSE trading floor, now a National Historic Landmark, is known for its loud bells that ring every morning (9: 30 a.m. local time) and afternoon (4: 00 p.m.) to mark the beginning and end of a trading day.。

In 1971, NASDAQ (National Association of Securities Dealers Automated Quotations) began trading as the world's first electronic stock market.。Embracing tech, Nasdaq also became America's first stock market to trade online。Unlike the New York Stock Exchange, it does not have a central trading floor of human traders.。NASDAQ is now a popular place for tech companies to list their shares。

The New York Stock Exchange (located in downtown Manhattan) and Nasdaq (located in downtown Manhattan) are not only the two largest stock markets in the world for trading stocks by value, but also fierce intra-city competitors, competing for companies that choose where to list.。

Whether a company chooses NYSE or NASDAQ has little effect on stock buyers or sellers。Retail investors can usually buy shares through their brokerage accounts, regardless of which exchange the shares are listed on。