how does the stock exchange market work?

Question

i dont get it.
please explain in baby language thankssss

Answer 1

It's like Wal-Mart.

Except you buy Companies instead of Oranges and Apples.

Answer 2

Most stocks are traded on exchanges, which are places where buyers and sellers meet and decide on a price. Some exchanges are physical locations where transactions are carried out on a trading floor. You've probably seen pictures of a trading floor, in which traders are wildly throwing their arms up, waving, yelling, and signaling to each other. The other type of exchange is virtual, composed of a network of computers where trades are made electronically. The purpose of a stock market is to facilitate the exchange of securities between buyers and sellers, reducing the risks of investing. Just imagine how difficult it would be to sell shares if you had to call around the neighborhood trying to find a buyer. Really, a stock market is nothing more than a super-sophisticated farmers' market linking buyers and sellers. The most prestigious exchange in the world is the New York Stock Exchange (NYSE). The "Big Board" was founded over 200 years ago in 1792 with the signing of the Buttonwood Agreement by 24 New York City stockbrokers and merchants. Currently the NYSE, with stocks like General Electric, McDonald's, Citigroup, Coca-Cola, Gillette and Wal-mart, is the market of choice for the largest companies in America. The NYSE is the first type of exchange where much of the trading is done face-to-face on a trading floor. This is also referred to as a listed exchange. Orders come in through brokerage firms that are members of the exchange and flow down to floor brokers who go to a specific spot on the floor where the stock trades. At this location, known as the trading post, there is a specific person known as the specialist whose job is to match buyers and sellers. Prices are determined using an auction method: the current price is the highest amount any buyer is willing to pay and the lowest price at which someone is willing to sell. Once a trade has been made, the details are sent back to the brokerage firm, who then notifies the investor who placed the order. Although there is human contact in this process, don't think that the NYSE is still in the stone age: computers play a huge role in the process.

The second type of exchange is the virtual sort called an over-the-counter (OTC) market, of which the Nasdaq is the most popular. These markets have no central location or floor brokers whatsoever. Trading is done through a computer and telecommunications network of dealers. It used to be that the largest companies were listed only on the NYSE while all other second tier stocks traded on the other exchanges. The tech boom of the late '90s changed all this; now the Nasdaq is home to several big technology companies such as Microsoft, Cisco, Intel, Dell and Oracle. This has resulted in the Nasdaq becoming a serious competitor to the NYSE. On the Nasdaq brokerages act as market makers for various stocks. A market maker provides continuous bid and ask prices within a prescribed percentage spread for shares for which they are designated to make a market. They may match up buyers and sellers directly but usually they will maintain an inventory of shares to meet demands of investors.

The third largest exchange in the U.S. is the American Stock Exchange (AMEX). The AMEX used to be an alternative to the NYSE, but that role has since been filled by the Nasdaq. In fact, the National Association of Securities Dealers (NASD), which is the parent of Nasdaq, bought the AMEX in 1998. Almost all trading now on the AMEX is in small-cap stocks and derivatives.

There are many stock exchanges located in just about every country around the world. American markets are undoubtedly the largest, but they still represent only a fraction of total investment around the globe. The two other main financial hubs are London, home of the London Stock Exchange, and Hong Kong, home of the Hong Kong Stock Exchange. The last place worth mentioning is the over-the-counter bulletin board (OTCBB). The Nasdaq is an over-the-counter market, but the term commonly refers to small public companies that don’t meet the listing requirements of any of the regulated markets, including the Nasdaq. The OTCBB is home to penny stocks because there is little to no regulation. This makes investing in an OTCBB stock very risky.

Answer 3

Well it's pretty complicated... They're are certain business called corporations. These are business owned by stockholders. What they do is ask a certain price for a certificate called a stock. Lets just say you bought a stock from a corportation for $1.00. Everyday the price of your stock may change. If the stock market is going good the price will go up. If it is bad, then the price of your stock will go down. After you buy a stock you should watch the stock market for the price of your stock and if you like the amount of money that your stock is now worth then you sell it and gain money. If you buy a stock, you should wait a LONG time such as many, many years and wait for the price of your stock to go sky-high. Another way to know if a business is a corporation is if it has an Inc. after the company name. These are the basics about stocks.

Answer 4

The origin of stock markets goes back a couple of centuries. The roots
of stock markets are to be found at the beginnings of the Industrial
Revolution that began in Europe about four centuries ago. Many of the
pioneer merchants of the industrial age wanted to start huge
businesses, which no single merchant could raise alone. It therefore
became inevitable for them to come together, pool their savings and
start these businesses as partners or co-owners. The contribution of
each partner to the enterprise was to be represented by a unit of
ownership. This was the precursor to what we call shares. And
through this, ‘joint stock’ companies were born.
Initially, trading in shares began as informal “hawking” in the streets
of London. As the volume of shares increased with more companies
floating shares (giving people opportunities to buy their shares), the
need for an organized marketplace for the exchange of these shares
escalated. As a result, these traders decided to be meeting at a
coffeehouse, which they used as the marketplace. Eventually, they
took over the coffeehouse and changed its name to ‘stock exchange’.
This was in the year 1773, and the first stock exchange, the London
Stock Exchange, was founded. Financial intermediaries (brokers,
fund managers, investment advisers investment banks etc) and
other instruments like bonds were then to follow suit as an inevitable
consequence.
The Nairobi stock exchange
The Stock Market is therefore a market, which deals in the exchange
of shares of publicly quoted companies, and government, corporate
and municipal bonds among other instruments for money. The
Kenyan stock market; the Nairobi Stock Exchange, which was
formed in 1954 as a voluntary organization of stockbrokers, is now
one of the most active markets in Africa. It is located on 1st Floor,
Nation Centre on Kimathi Street, in Nairobi.
As a capital market institution, the Stock Exchange plays an important
role in the process of economic development:
• It helps mobilize domestic savings thereby bringing about reallocation
of financial resources from dormant to active agents.
• Long-term investments are made liquid, as the transfer of securities
(shares and bonds) among the participating public is facilitated.
• The Exchange has also enabled companies to engage local
participation in their shares ownership, thereby giving Kenyans a
chance to own shares of reputable firms.
• Companies can also raise extra finance essential for expansion and
development. To raise funds, a company (issuer) issues extra
shares; an issuer publishes a prospectus, which gives all pertinent
details about the operations and future prospects of a company,
while at the same time stating the price per share of the Issue.
• A stock market also enhances the inflow of international capital.
• Stock markets also facilitate government’s privatization
programmes.

Answer 5

Brokers, like Charles Schwab Company, are members of a stock exchange (like the NYSE). They pay a fee to the exchange. The broker's job is to match sellers and buyers of stocks.
Traders, who work for the brokerage houses, work out deals with other traders to buy and sell stocks.
A broker has a customer who wants to buy 1,000 shares of GE at $36 per share. His trader lets other traders know he wants to buy GE at that price. If someone is willing to sell 1,000 shares of the GE stock which they already own, at $36, they have a deal.
If no one wants to sell at $36, the original buyer has to either up his offer, give up, or try buying something else.
The original buyer and original seller never meet, don't communicate and don't know the other party. All of the buying and selling is done through intermediaries.