The stock market is a marketplace that brings together people who want to sell their investments with people who want to buy them. Shares of companies represent part ownership, and if the company is successful, the value of those shares rises over time (that’s called capital growth). People invest in stocks to make money.
When a company wants to raise money, it can offer shares of itself in the primary market by offering an initial public offering or through private placements. These are times when the company gives its ownership to normal people like you and me, who in turn give it the capital it needs to grow and prosper. Companies also have a secondary market where they can list their stock for trading on exchanges or “over the counter” and anyone with a brokerage account can buy them.
Each trade in a stock takes place when someone who wants to buy a share meets a person who is willing to sell it at the right price. The process is often automated so that the trade happens almost instantly. The price of the stock can move up or down, depending on a variety of factors including the company’s sales of goods and services and the overall state of the economy and the stocks of other companies.
Many investors choose to use brokerages or investment platforms on their computers, tablets and phones to make their trades. These systems can handle trades during the hours that the stock markets are open, as well as for several hours before and after the markets close each day.