How Does The Stock Market Work?


A stock market, stock exchange, or share exchange is an entity organized around a particular company that promotes the buying and selling of shares in that company. The exchanges provide the market with a venue through which companies can list their stock for trading. A large number of exchanges exist around the world, though there are hundreds of others operating in various countries.

The buying and selling of stock allow businesses to raise funds by issuing shares to investors. Since the exchange rate between shares is controlled by a central board, the value of a share typically increases over time. This allows businesses to raise capital and expand their operations. Because stock market investment strategies are based on the performance of a company’s shares, investors can purchase a set number of them or a variety of different stocks at any given time. As the investments of both individual investors and larger companies increase, so does the amount of power inherent in the shares.

Nasdaq is one of the exchanges that allow investors to trade shares on a regular basis. Another major exchange used by many companies is the New York Stock Exchange, also known as the NYSE. Major banks such as Citibank operate through the New York Stock Exchange. Nasdaq and the New York Stock Exchange were created to serve as venues for the trading of company shares internationally, with Nasdaq serving in international markets.

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