when you buy a stock or a share you re getting a piece of that company how much of the company you own depends on the number of shares the company has issued and the number of shares you own if it s a small private company a single share could represent a large part of the company major public companies often have millions even billions of shares for example apple inc aapl has billions of shares in circulation so a single share is just a tiny fraction of the company 
owning shares gives you the right to part of the company s profits often paid as dividends and sometimes the right to vote on company matters once a company goes public its stocks can be traded freely on the stock market this means that investors can buy and sell shares among themselves this is the secondary market for stocks and most trading is done through stock exchanges this part of the larger stock market dates to at least 1602 in amsterdam evolving since into some of the world s most complex institutions stock exchanges are organized and regulated places much trading today is virtual where stocks and other types of securities are bought and sold they play a crucial role in the financial system by providing a platform for companies to raise money by selling their stocks and bonds to the public the nyse and nasdaq are prime examples serving as central locations for the buying and selling of stocks there are major exchanges worldwide such as the london stock exchange the tokyo stock exchange and the shanghai stock exchange each has its own internal rules and investors follow different national and local laws these are meant to ensure fair trading practices and to keep investors confident in dealing there they also provide transparency in the trading process giving real time information on securities prices which is why it s so easy to find up to date stock prices on just about any financial news site stock exchanges wouldn t live up to their name though if they didn t offer liquidity the ability to buy or sell stocks relatively easily this means that during trading hours you can buy a stock quickly or just as rapidly sell it to raise cash many stock exchanges also cross list company shares offering securities primarily listed on other exchanges this way companies can reach more investors when raising capital and those trading with certain exchanges have far more options though it is called a stock market other securities such as exchange traded funds etfs are also traded there stocks and other securities are also traded over the counter otc these otc markets are where you buy or sell stocks directly with another investor typically without the same level of regulation or public scrutiny otc trading involves a network of brokers and dealers who negotiate directly over computer networks and by phone this type of trading is commonly used for smaller less liquid companies that may not meet the stringent listing requirements of the stock exchanges this can make it more challenging for investors to get reliable information about the companies they are investing in in addition to common stocks many other assets are traded through stock exchanges and otc these count as part of the stock market more loosely while independent markets people often talk about these as part of the stock market those involved in the stock market include institutional investors such as pension funds mutual funds insurance companies and hedge funds that manage large amounts of money and often have a significant influence over the market since they are trading in large volumes retail investors buy and sell securities for their personal accounts not for an organization they can range from beginners to experienced traders and today most use online platforms another key group is accredited investors high net worth individuals with the money and investing experience so the sec allows them access to more complex investments like venture capital and private equity generally speaking investors approach the market from a long term perspective they put money in stocks etfs mutual funds and other securities expecting their value to grow over time these are not the quick trades you see in movies to get in and out fast these investors are often more concerned with the fundamental strength of the companies or assets they invest in such as their financial performance market position and potential for growth they decide on investments after research and analysis or after getting recommendations from financial advisors while trying to build wealth steadily through a portfolio that increases in value over time traders for their part take a more short term approach to the stock market they aim to capitalize on the market s volatility trading stocks options futures and other financial instruments within shorter time frames from seconds and minutes to days and months traders often rely on technical analysis which involves studying market trends charts and other statistical measures to predict future price movements while trading can offer the potential for quick profits it also comes with higher risks than long term investing quickly buying and selling securities requires a sharp understanding of the market and a more active hands on strategy to trading brokers in the stock market play the same role as in insurance and elsewhere acting as a go between for investors and the securities markets they are licensed organizations that buy and sell stocks and other securities for individual and institutional clients brokerage firms can be small boutique shops or multinationals offering investment advice research and wealth management services while executing trades for customers full service brokers provide detailed financial advice portfolio management and personalized services making them better for investors who prefer a thorough approach to managing their investments further down in cost discount brokers provide a more hands off experience and are typically preferred by investors who make their own trading decisions online brokerage firms have become increasingly popular with user friendly platforms that allow investors to trade securities electronically at lower costs and more convenience these platforms often have educational resources analytical tools and real time market data there has also been a rise in robo advisors automated financial planning services offered at a very low price whatever type of broker they are all regulated by the sec and financial industry regulatory authority finra in the u s a significant aspect of the stock market dictating what s traded and how is the regulations and regulators involved in the u s the latter is the sec an independent federal agency set up in 1934 on the heels of the 1929 market crash and the travails of the great depression the mission of the sec is protecting investors maintaining fair orderly and efficient markets and facilitating capital formation 5the sec enforces laws against market manipulation insider trading and other forms of fraud while verifying that public companies reveal any significant financial information investors should know when trusting a firm with their money by buying its stock the sec also oversees stock exchanges broker dealers investment advisors mutual funds and public utility holding companies in addition the exchanges have their own requirements such as filing timely usually quarterly updates to company financial reports and instant reporting of relevant corporate developments to ensure that everyone looking to trade has the same information finra oversees brokerage firms and their registered securities representatives and is more focused than the sec on protecting retail investors similar agencies exist worldwide which is crucial given how the stock market is global and a calamity in one corner of the world soon reaches the other it s not just something that happens from a few buildings on wall street while many countries regulations differ significantly they answer to diverse populations and cultural expectations general rules are enforced to ensure fair practices protect investors and promote confidence in the broader stock market textbook descriptions of stock prices tend to start off talking about investors and dealers coming together and for there to be a stock trade the buyer and seller must agree on a figure but most investors find prices as they are listed in online brokerage accounts or online graphs of stock prices over time not as coming from tough negotiations that said you do have to agree to buy stocks and each investor or trader making this decision collectively shapes the demand for stocks which taken against the supply on hand in the market produces the prices on our screens the factors that influence these prices fall into two main types fundamental and technical fundamental factors are rooted in a company s earnings profitability from its operations and the goods or services it offers meanwhile technical factors relate to market sentiment and statistical analyses of historical market activity and stock price trends high stock prices can indicate a company s success or at least the feeling of buyers that they are doing well but they can also result from stock splits dividends and share repurchases when a stock price drops this doesn t mean that money is lost from the market as a whole instead it signifies a decrease in the market value of the specific stock for instance if a company reports higher profits than expected its stock price might increase as more investors want to buy shares hoping for future growth similarly economic events like interest rate changes or geopolitical issues can affect investor confidence and stock prices most americans first learn about the stock market through indexes since reporting on the ups and downs of the dow jones industrial average djia or s p 500 has long been a staple for news programs to quickly get across the news about wall street indexes like the djia which includes 30 large publicly owned companies give a picture of the wider stock market indexes can be used to take a very wide shot of the market such as with the s p 500 representing the 500 largest u s public companies there are currently 11 sectors for specific groups like technology healthcare or consumer discretionary companies etc indexes are important since they are used as benchmarks for stocks and portfolios for example if you re invested in technology stocks you ll want to see how your stocks are doing against a tech index you ll then have a better way to rate your returns 