What Is the Stock Market?


Quick Answer

A "stock market" is any type of exchange where stocks or shares are bought and sold. The term "the stock market" is often used colloquially to refer to the world's biggest stock exchanges such as the New York Stock Exchange.

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Full Answer

Stocks and shares are collectively referred to as "equities" or "securities" and represent an ownership stake in a company. Stock markets are where these securities are exchanged by buyers and sellers.

A stock market may be physical or entirely virtual. The New York Stock Exchange, the world's largest exchange in terms of trade value and capitalization, is physically located on Wall Street in New York City. Trading was traditionally done in person, but the option to trade most stocks electronically was added in 2007. The NASDAQ, the world's second largest stock exchange, has always been entirely virtual. Trading was originally done by telephone, but is now primarily done by computer.

The process of exchange is generally for buyers to name a price they are willing to pay for a particular stock and for sellers to name their selling price. In physical markets, brokers and specialists match buyers and sellers, but this can be done entirely by computer in virtual markets.

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