What Are the Activities of the Stock Market?

What are the activities of the stock market? Stocks are traded by individual investors and institutions on exchanges, where supply and demand determine the prices. Market makers, or brokers, make and sell stock orders. These traders and investors place bids and offers on the shares, and each transaction is completed within seconds. The price of a stock fluctuates minute by minute as these traders and investors convert their intentions into actions. When you buy and sell a stock, it is known as a trade, and the price is based on the bid and ask.

The stock market helps investors and companies value their securities. Typically, companies that are profitable and growth oriented are valued higher than those that do not. This information is important for creditors and the government, as they can tax the value of these securities. The stock market is a public arena, and only listed securities are traded. Stock exchanges verify that companies are financially sound, and listed companies operate within strict rules and regulations.

The main activities of a stock market depend on the type of stock. Companies sell their shares directly to investors, in some cases during an IPO or a new funding round. However, companies usually conduct the majority of their activities outside of the framework of a stock exchange. Brokers, or brokerage firms, act as middlemen for companies and investors. They can also buy and sell shares from existing shareholders. This process is known as the secondary market.