Stock Exchange:
As the name
implies, a stock exchange is a centralized place where the exchange of stocks
takes place. The stock exchange does not own any shares but acts as a place or
market for buyers and sellers to connect. Thus, the exchange, i.e., the buying
and selling of stocks, occurs on a stock exchange.
The New York Stock
Exchange, NASDAQ, London Stock Exchange Group, the United Kingdom, and Italy
are among the world's largest stock exchanges.
What is the
difference between the Stock market and the stock exchange?
A stock exchange is
a place where the exchange of stocks takes place. A stock market is an umbrella
where all the stocks, shares, bonds, etc. are kept.
Who sells the
stocks?
or
From whom should I
buy or sell stocks?
The stock exchange
is not like a shop where you can buy a particular stock. Rather, the stocks are
traded through registered brokers.
Let's take an
example. Assume company A has launched its initial public offering (IPO). So
company A will sell the shares to an initial group of public shareholders. This
group of initial shareholders is called the primary market. When a company
conducts an IPO, it sells its shares to the general public directly, which is
known as the "primary market." Now, once all shares are sold to
public shareholders, these can be purchased once they are sold by them. This is
called the secondary market or exchange.
What is the role of exchange?
Once the shares are
on the market, the stock exchange tracks the flow of each stock. The basics of
the stock market come into play: "supply and demand." Supply and
demand are the terms used in the stock market. It is the relationship between
the number of available shares and the demand for them. When there is an excess
of supply and no demand, the price of a share falls. If demand exceeds supply,
the price of a share or stock will skyrocket through the roof.
Hence, you can see
the price of shares fluctuating every now and then.
Do you need to go
to a stock exchange to trade stocks?
You actually do not
need to physically go to a stock exchange in order to trade your stocks.
Earlier, you had brokers who would do this for you. You can contact them even
via phone, and they will take care of your stocks for a brokerage (fee).
Nowadays, you can
trade with your phone directly with minimal fees and a lot of control in your
hands. You can sell or buy stocks with ease using your smartphone. You can keep
a record of your portfolio with a lot of transparency.
How can you trade and invest in stocks?
You can open a
trading account in under 5 minutes using your smartphone. It is simple and
requires minimal documents. You can trade not just in stocks but in gold,
forex, bonds, and other commodities. Just remember to share your details with a
trusted broker.