A Quick Overview of the Modern Stock Market - By: Art Gib

The stock market, which is also termed as the equity market, is a private or public market for the trading of shares of company ownership and derivatives at an agreed price.

The size of the world market is estimated at about $36.6 trillion US as of the beginning of October 2008. The trading of stocks is carried out in an exchange. The stock exchanges are specialized in bringing the buyers and sellers of the organizations to the listing of stocks and securities.

In the United States, the market trading is connected with the securities that are listed on the NYSE, the NASDAQ, AMEX, in addition to the many regional exchanges; namely Pink Sheets and OTCBB. In trading, the examples of European exchanges include the London Stock Exchange, the Deutsche Bourse and the Paris Bourse, which is now part of Euro next.

Concerning trading in the market, the participants may range from small stock investors to huge fund traders who can have bases anywhere. Their orders are assessed by an official in the exchange who finally executes the order.

Some exchanges have physical locations wherein the transactions are carried out on the trading floor and this method is termed "open outcry." In this type of auction, the traders enter verbal bids and the offers are executed simultaneously.

The market trades are based on an auction paradigm where the potential buyer bids a specific price for the stock and the potential seller asks for a specific price. A sale takes place when the bid and ask prices match on the first come, first served basis.

The advent of computers has eliminated the need for trading floors in the sector, thereby bringing more orders in-house where clients can move big blocks anonymously.

Regarding marketing, many years ago buyers and sellers were individual investors, such as wealthy businessmen holding reputed family histories. Now, markets have become more "institutionalized."

The buyers and sellers in today's market are largely institutions like insurance companies, mutual funds, index funds, banks and various other financial institutions. The advent of the institutional investor companies has paved way for some improvements in operations such as those related to the brokers solid front on fees.

Thus companies raise money with the stock market acting as an important source for the same. Businesses can be traded publicly or they can raise additional capital for business expansion by selling the company shares in the public market.

The rise of prices of shares is an integral part of the dynamics of economic activities and is a sign of the country's development and economic strength.

About the Author

Blue Chip Stock Trader (http://bluechipstocktrader.com/) the experts you should go to when you need stock tips. Art Gib is a freelance writer.

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