Stock market is a place where public companies list their shares for buyers and sellers to trade.Trading happens in exchange via stock broker and electronic trading platforms.Stock market can be imagined as a collection of Stock exchanges.
Trading in the stock market means securities are transferred from seller to a buyer.
How does it work ?
For example,
- A Company lists shares on an exchange( which becomes Guarantor ).This process is called an IP ( Initial Public offering ).
- Buyers of this stock ( Long term Investors, Short-term Traders and others ) discover this company
- A buyer ask specific price for a stock – This is Bid price
- A potential seller asks a specific price for the same stock – This is the ask price.
- When bid and ask prices match, stock exchange facilitates buy and sell transactions. If there are multiple buyers and multiple sellers at a given price a sale happens on a first come first-served basis.
Exchanges provide real time pricing information of these listed company shares (also referred to as stock or equity ) for buyers and sellers to make a decision. Buyers and Sellers interact with exchanges via stock brokers and electronic trading platforms.
Examples of Stock Market exchanges: NYSE,NASDAQ.
Examples of Stock brokers : eToro,Fidelity, Robinhood, Fidelity, Trade Station.Examples of Electronic Trading Platforms : E-Trade, Nasdaq.