How The Stock Market Works

Stock market basically means a market where people are able to exchange their goods, which are stock in this case. Three major components that make up the stock market are; company shares, companies for sale and stock exchanges or shares. Everyone who trade in stock market want to know how does the stock market work? The movement of the market depends on investor’s sentiments. The investors at a particular point want to sell their shares as they feel the company they have invested in is at present not doing well or may not do well in future. Whereas there are others investors who think that the same company will do well in future so it’s a good time to buy. In a condition where there are more buyers in comparison to sellers, that market is knows as the Bull Market, whereas in case where there are more sellers and less buyers is called as Bear Market. Stock Exchange are of two kinds one is the Virtual Stock Exchange and other is the Physical Stock Exchange. The stock exchange where you can do online trading is called Virtual Stock Exchange. NASDAQ is an example. Physical Stock Exchange is where you need to have an account with a broker or a firm in order to do trading of shares. NYSE is an example of this type of exchange.

The regulatory body known as commission of securities and exchange (SEC) which controls the stock exchange work, makes sure that during buying and selling the small investors do not get the feeling of being left out. When trading on Internet was not available the only way of buying stocks was through a Stock Broker. The broker was registered with one of the exchanges and would buy shares on your behalf from that particular exchange. But now with Internet in use you can find large number of online discount brokers who are able to carry out the orders in no time. One should always have knowledge as investors regarding the blue chip companies because in the market they are considered to be the major force and in their industry they are leaders. On contrary, before you investing in stocks you should also know about the penny stock companies, which are basically companies that are at high risk. It is advisable to do a thorough research on the stocks you want to invest in with the help of technical analysis.

Stockbrokers are people who handle the buying and selling of shares and earn money by taking care of stock transactions for you on the exchange. In US at present there are 3 main stock exchange; American Stock Exchange- AMEX, New York Stock Exchange – NYSE and National Association of Securities Dealers –ASDAQ. American Stock Exchange has around 1350 securities and its trading volume on a daily basis is around 83 million shares. Firms that are listed on AMEX first work towards meeting the requirements listed by the NYSE after which they switch. Normal session for trading of the exchange’s are all weekdays from 9:30 am till 4:00 pm except Saturday s and Sunday s as well as holidays that are declared in advance by the Exchange.