Stock market is a group of people and institutions that buy and sell stocks. Investors use it to make money, while companies use it to raise funds for growth. It’s one of the key features of modern economies and has been a driving force behind financialization, in which many countries have become dependent on the stock market for raising money and creating wealth.
A share of a company’s stock represents ownership in that business. A small private company might have just a few shares, while a large public company may have billions in the market. A share price changes as buyers and sellers negotiate a new price with each other. If demand increases, the price goes up; if supply decreases, the price goes down.
If you’re an investor, you can purchase and sell stocks through a broker or online trading platform. Your order goes to the stock exchange or other trading venue (like the New York Stock Exchange) where mediators match “bid” and “ask” prices. The bid is the highest price a buyer is willing to pay, and the ask is the lowest price a seller is willing to accept. Once an offer and bid are matched, the trade is completed.
The market’s participants include individual retail investors, institutional investors (like mutual funds and insurance companies), traders who buy and sell frequently based on price movements and other factors, and banks and financial institutions that hold stocks and invest in them. In addition, governments and international bodies have regulatory agencies that oversee the market to ensure fairness and transparency for all participants.