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Where To Trade The Stocks A Exchange Side View

Aug 22, 2008
The price of any stock is decided by the buyers and the sellers for most of the stocks traded on the exchange market, but in some of the exchanges the transactions are carried out on a trading floor itself. Also, there are other types of exchanges where the trades are done electronically. The stock market is like a mediator between the buyer and the seller where the exchange of securities takes place.

There are two types of stock market: Primary market and the secondary market. The purpose of a primary market is to introduce the stock by way of IPO's whereas the secondary market is a place where the investors trade on the existing or the listed securities on the exchange. You can think of secondary market like the normal market where you buy stuff from the shopkeeper except in this case you buy shares from the stock broker and have the best possible prices display on the screen.

The most prominent exchange in the entire globe is the New York Stock Exchange also referred as NYSE. This exchange was set up in the year 1792 with the signing of the Buttonwood Agreement by 24 New York City Stockbrokers and the merchants. NYSE is also known as listed exchange, is one of its own type where the trading is done directly on the trading floor.

The brokerage firms who are the members of the exchange pass orders to the floor brokers who trade for the specific stocks. On the trading floor specific person known as the specialist who matches the buyers and the sellers demand. The price of stock is determined by mode of auction, where the buyer is ready to pay the highest price for the stock and the lower price at which anybody is willing to sell the stock. The brokerage firm receives the details of the trade once it is completed and in turn the investor is intimated of the transaction taken place.

The second type of exchange is known as over the counter (OTC) market. These types of market do not have any central location for the brokers to trade. Trading here is done through communication network between the dealers. There is now rivalry between NASDAQ and NYSE.

At NASDAQ brokerages act as market makers for the various stocks, where market makers provides bid and the ask prices within a prescribed percentage spread for the shares.

No matter where you trade you should be able to make money in the market through good stock picking.
About the Author
The author is an avid investor in stock market and uses some of the stock market basics for investing. He has been following all the stock market basic techniques to make some handsome profit in the stock market.
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