So where does one find these shares of stock That are Being traded all of the time? They do so from the stock exchange. Each time a share of stock is traded it’s because of two parties, possibly two unique businesses, companies, or people, agreeing upon a price at which one of these is selling the inventory and the other one is buying the stock. This is important to understand and live on since it explains the idea of a market. “Market” suggests a place where there are buyers and sellers buying things. The stock exchange is where individuals exchange claims of ownership (shares of stock) to each other at an agreed upon price. This occurs electronically on the stock market. The major stock exchanges in the United States are New York Stock Exchange (NYSE) and the NASDAQ. There are many others, but for the purpose of this book I will only mention these.
Exchanges are important because that is where stocks are Listed for us to purchase and the market is the thing which manages all the behind the scenes things for trading stocks like settlement, clearing, and helping keep markets liquid (we will talk liquidity in chapter 10).
What is the difference between a market and an indicator?
A market is where stocks Are traded, simply place. On the news when you hear someone say”The market closed up now!” They are referring to the indicator, that on average, most stocks closed higher than when they opened.
Need to look closely at the different indices to have the ability to understand how the market as a whole is performing and which direction it might be headed.
- The stock exchange has its own holiday calendar and does close on specific holidays.
- The Asian markets close only a couple hours ahead of the US markets open and the European markets open only a couple of hours before the US markets. Essentially, there is never a time when a stock exchange is closed, only that the one you’re investing in is shut.
- The term used for when the market opens until it closes is known as the”trading session” and is only known as”today’s session” or”yesterday’s session.”
- The stock exchange affects everyone. It’s where everybody who has any sort of retirement at a 401k or IRA straight has money invested in stocks and other instruments that trade on the exchanges. The stock exchange also affects companies and our economy as a whole.
A FURTHER WORD ON BUYERS AND SELLERS
The Purchaser believes the shares they are getting will be The seller, on the other hand, perhaps has already made money on these shares or they do not think they are going to be worth more later on. It’s important to see this as it will make you be a better investor.
US STOCK INDICES
Following are a few examples of notable US stock indices. To find The indices of the nation, simply research online”List of stock indices in insert name of state.”
§ Dow Jones Industrial Average (or simply, the Dow) – One thing to notice, when you hear about the news that”The market was up” or “The market was down,” they are generally referring to what”the Dow” did this day.
§ Even smaller nations have them.
Meet to trade stocks on an agreed upon cost with one another.