How Stocks are Traded

Stocks are usually traded on exchanges, it is the spot where buyers and sellers meet and decide on a certain price. Some exchanges on the other hand, are regarded as physical locations wherein transactions are carried out on a trading floor. 

On a trading floor, traders were seen as waving their arms, yelling, and signals each other, while the other type of exchange is virtual. On a virtual, trades were made electronically where a network of computers is linked. 

The stock market’s aim is to aid the exchange of securities between buyers and sellers at the same time, limit the risk of investing. It would be hard to sell shares if you had to call all your neighbors just to find a buyer. Basically, a stock market is a market tool in linking buyers and sellers. 

Just a quick review, you should first know the differences between the primary market and the secondary market. Securities are done in the primary market by means of an IPO, while in the secondary market, the previously-issued securities were traded by investors without the connection of the issuing-companies. 

When people are talking about the stock market, they usually are referring to the secondary market. It is very significant to deeper understand that the trading of a company’s share does not directly involve that firm.  

The New York Stock Exchange 

The New York Stock Exchange is regarded as the most prestigious exchange worldwide. The “Big Board” was founded more than 200 years ago in 1792 along with the Buttonwood Agreement signing. 24 stockbrokers and merchants of New York City signed the agreement. Moreover, stocks such as General Electric, McDonalds, Citigroup, Coca-Cola, Gillette and Wal-Mart is considered as the NYSE’s recent market choice for America’s largest companies.

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