Stock

Stock

Definition

The stock market is where buyers and sellers come together to trade shares in eligible companies.

Understanding the stock market

Stocks are bought and sold on stock markets, which bring together buyers and sellers of shares in publicly traded companies. Stock markets operate kind of like auctions, with potential buyers naming the highest price they’re willing to pay (“the bid”) and potential sellers naming the lowest price they’re willing to accept (“the ask”). The actual execution of a trade price will be somewhere at or between the bid and the ask. Trades can be placed by stockbrokers, usually on behalf of portfolio managers or individual investors like you. In the US, the stock market is made up of 13 exchanges—the best known are the New York Stock Exchange and the Nasdaq.

EXAMPLE
Snap Inc., parent company of Snapchat, listed its shares publicly with its 2016 IPO. Shares now trade on the New York Stock Exchange under the ticker symbol “SNAP.”

Takeaway

Stock markets are complex, but they’re all based upon one simple concept....

From New York to Hong Kong, every stock market helps connect buyers and sellers, who trade under an agreed upon set of rules.