Stock Market Explained - A Guide to Understanding What a Stock Market Really Is

[sam harries]

The stock exchange is a vast organisation with origins in about eleventh century France. From these origins in agriculture, it has several duties to perform nowadays. It caters for a vast variety of financial aspects and is the most important component of in the world of trading. Nothing has changed in the sense that it has involved banking, in one form or another, since those earliest days.

Here is an introduction of 5 criteria that outline what the stock exchange is all about:

1. The Corporation. There's a slight misconception as to what a corporation is Stock market Exchange. In simple terms it is a legally binding document that hold a group of people together in a business. It is s vehicle through which corporate law operates in order to hold the balance between the various factions in the business environment. With respect to what we're interested in, the interests and obligations of shareholders, are binding in the terms of this document.

2. A Mutual organization. The difference between a mutual organisation and financially motivated arrangement, or investment, is that the mutual works on the basis of what the partners can bring to a business in terms of customer relationships. There are no outside influences such as shareholders to satisfy and funds are re-cycled into the business by the members.

3. The Stock brokers. The men and women who undertake the execution of our offline trading, are professionals who have gained their positions by fulfilling the requirements of several legal examinations. They're qualified and regulated by such bodies as the FSA in the UK and the General Securities Representative Examination in the USA. Their role is maybe not as prominent in recent years, with the advent of online trading platforms.

4. Traders are the people who make the market move. Their buying and selling are what makes it all happen and traders can be anyone from the full time professionals to the part time day traders, from the big bank and institution to the home hobby-traders. For every buyer there's a seller and vice versa. It is a zero-sum game.

5. Stocks is the term applied to one of many items that are traded. Stocks are the measure of units representing the value of a company. It should be noted that Stocks is an American term, whilst Shares are the UK equivalent. Hence, they both amount to the same thing. Each has its sub divisions or categories, depending on such criteria as the type of industry for instance.