Discover the system that drives global investing and allocates trillions of dollars.
The stock market is a platform where buyers and sellers trade shares of publicly listed companies. It's not a single place, but a vast network of global exchanges like the NYSE and NASDAQ.
It functions similar to that of an auction house—prices fluctuate based on supply and demand, investor sentiment, earnings, and global events.
When a buyer places an order, it goes through their broker, who routes the order to the stock exchange. The exchange then matches the order with a corresponding sell order from another broker, who represents a seller. Funds flow from the buyer to the seller, while shares are transferred in the opposite direction.
Retail Investors - Individual traders like you
Institutional Investors - Hedge funds, mutual funds, pension managers
Market Makers - Ensure liquidity by buying/selling continuously
Exchanges - Facilitate trades (e.g. NYSE, NASDAQ)