A stock market is an enormous market on which people can trade shares from many companies. People can buy and sell shares whenever they want, while the companies can offer their shares to this market and get funding in order to improve their facilities.
Organization which satisfies the needs of stock investors
The stocks, which are traded, are all parts of the big organizations which are putting sellers and buyers together in order to successfully do the business and satisfy their needs of buying and selling.
List of the largest stock markets in the world
The largest stock exchange markets are NYSE (New York SE) in United States, Toronto SE in Canada, Amsterdam SE, SE in Paris, Deutsche Börse, London Stock Exchange in Europe, SE in Nigeria inAfrica, BMV and BM&F Bovespa in Latin America and Philippine Stock Exchange, Tokyo Stock Exchange, Hong Kong SE, Singapore Exchange, Shanghai Stock exchange, Bombay SE in Asia.
Can I participate in stock market too?
Everyone can participate in stock markets. All participants have been divided into following groups:
*institutional investors (banks, mutual funds, hedge funds, insurance companies)
*corporations which are trading with their own shares
How are trades being executed?
Trades are usually being made on two ways:
*open outcry – similar to open auction, people gather on the trading floor and make “verbal” bids
*virtual trade – trades can be made electronically with computers via traders
What determines when will the trade happen?
Auction model is used while trading, which in other words means that buyers can bid and sellers can ask for the specific price for the stock and once when those two, ask and bid price match, trade will be made (if there are multiple same offers, good old method first come first served will be used). Term “buying / selling at market” is used when somebody is / wants to buy / sell stock for any ask / bid price that is currently offered on the market.
What is the purpose of the organization of stock exchange?
The whole purpose of stock exchange is to enable buyers and sellers to exchange their shares as they want to in order to achieve their goal.
There are two ways of trading
Every stock exchange can be the place where physical exchange is being made, hybrid market is there to enable both electronic way of trading and the old traditional live trade on trading floor.
Detailed process of executing the trade
Orders can be made on trading floor. They will be sent to a floor broker. Once that happened, he will go to floor trading post specialists, so he can trade the order.
Specialists then takes the order and his job is to use open outcry (explained above (some kind of live auction)) so he can match sell and buy orders. If that is not possible because “spread” (difference in buying and selling price) exists, trade will be not executed immediately. Then specialists will use her/his resources (depending on if order was to buy or sell stock – stock or money) and close that difference after time which he decides.
Once the trade is complete, brokerage firm will be notified immediately and it will call the investor that placed the order. Even thought whole trading process involved lots of human contact, computers are playing very big role in the process. Their role is even bigger in program trading (trades with predetermined conditions executed by computer program).
Invest, be careful & earn!
Trading on stock market can be great source of income, but only if you are take your time and study the stocks, be careful and watch where you are going to invest since there is no guarantee for the money invested.
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