Stock is possession in a business. Each share of stock represents a little piece of possession. The more shares a person holds, the more part of the company he owns. The more part of the company a person owns translates to more dividends he earns when the company profits.
A stock market is a market for the trading of publicly held company stock as well as associated financial instruments such as stock options and stock index futures. On the other hand, stock market trading is the buying or selling securities or commodities specifically in the stock market.
There are two basic methods of doing stock market trading. Traditionally, stock markets where open-outcry where trading happened on the stock exchange floor. The more modern way of doing stock trading is through electronic exchanges where everything occurs online real-time.
Market trading through the exchange floor could not look any more chaotic. When the stock market is open, hundreds of folk are seen rushing about, shouting and gesturing to each another on the exchange floor. Traders are also frequently seen chatting on phones, keeping a tight watch on the consoles and entering info into terminals.
Online market trading moves the trading off the floors and more into the networks. The electronic market employs a vast network of computers to match purchasers and sellers rather than human brokers. While lacking the excitement of the usual market exchange floor, it is quicker and more effective. Speculators often get a nearly instant confirmation on any trades done.
How does stock exchange trading work? Be it on the chaotic market exchange floor or electronically, one must get an investment broker first.
For traditional exchange floor trading, after asking a broker to buy a particular number of shares at the market, the broker’s order department sends this order to the clerk on the floor. The clerk alerts a trader who unearths another trader who is willing to sell the shares the financier requested. The two traders decide on a price for the stocks and seal the deal. Notification is sent back the same way till the broker calls the financier to tell him the final price. This process may take some time depending on the market and stocks. Days later on the investor receive the confirmation mail.
The electronic counterpart is less complicated because the stock buying and selling are matched by the computers in real-time. And the investors get instant updates on what happens to his stock trade.
Want more info? Go to stock market prediction for more stock market tips.
Tags: stock market