How Does the Stock Market Work?


The stock market itself is one central location where stocks are bought and sold. It’s not a building or store though. There is no physical structure that one can look to when referring to the exchange. Most do associate either the New York Stock Exchange or Wall Street with this industry. The stock market is much bigger than that though. The reason these two are associated with the stock market is that they do a great deal of volume.

When determining which is the global principal stock exchange, the New York Stock Exchange will most likely come to mind. One must remember that not all stocks are traded on this index though. What makes this index so well-known is the fact that it is where one will find the stock of major companies which are both well-respected and impressive. Money is needed to invest here and many investors choose to do so through a broker as this allows the investor to bypass the floor trader to buy and sell.

The stock market actually consists of two markets known as the primary and secondary markets. When one wants to purchase securities from an initial public offering the investor will head to the primary market. This offering is the first sale of a company stock and has a base price. Once this occurs, the stocks will now be those of a publicly held company. The secondary market is the one that most are familiar with as stocks of publicly held companies are traded here. Most, when thinking of the stock market, tend to think of the secondary market.

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