As we saw in the previous section, once a company completes an initial public offering (IPO), its shares are made public and can be traded on the stock market. The stock market is the place where stock buyers and sellers meet and decide the transaction price. Some exchanges are physical locations for transactions
how stocks trade
The stock market is a secondary market where existing stock owners can trade with potential buyers. It is important to understand that companies listed on the stock market do not regularly buy and sell their own stocks (the company may repurchase shares or issue new shares, but these are not routine operations and often occur outside the exchange framework). Therefore, when you buy stocks in the stock market, you are not buying stocks from the company, but buying stocks from other existing shareholders. Similarly, when you sell a stock, you won’t sell it to the company – it sells it to other investors.
The first stock markets appeared in Europe in the 16th and 17th centuries, mainly in port cities or trade centers such as Antwerp, Amsterdam
In the late 18th century, the stock market began to appear in the United States, especially the New York Stock Exchange (NYSE) allowed stock trading (the honor of the first US stock exchange was attributed to the Philadelphia Stock Exchange [PHLX], which still exists today
The emergence of modern stock markets has ushered in an era of regulation and
There are also many loosely regulated OTC exchanges, sometimes called bulletin boards, which are acronym OTCBB. OTCBB stocks tend to be
Stock prices in the stock market can be set in a variety of ways, but most of the most common way is through the auction process, buyers and sellers can bid to buy or sell. The bid is the price that someone wants to buy, and the offer (or asking price) is the price that someone wants to sell. When the bid and the asking price coincide, the transaction is made.