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What Is Share Market Trading ?

Make Money From Shares

15th  Sept 2012


What is share market? Put it simply, it is the place where shares or stocks are bought and sold. In the financial markets ,to “trade” means to buy and sell. And you obviously do not like the idea of having to call around your neighborhood trying to find a buyer for your stocks or seller to sell you a stock you are interested.

There are two basic ways exchanges execute a trade i.e :

1)On the exchange floor

2)Electronically

The floor of the stock exchange is the location for market transactions in stock exchanges. It is the physical location of buying and selling stocks on a stock exchange. On the floor of the stock exchange, brokers and traders buy and sell stocks for their various accounts.

With the advent of electronic trading platforms, the floor of the exchange is being slowly eroded .However,  this method of trading is still active today and exist side by side with electronic trading platforms complementing each other.

What Is Share Market?The New York Stock Exchange (NYSE) operate out of the traditional exchange floor while  Nasdaq uses electronic trading platform. These two exchanges alone account for the trading of a substantial portion of equities in North America and worldwide.
 
Knowing the differences of these two stock exchange will help you better understand the function of a stock exchange and the mechanics behind the selling and buying of stocks.

Location

On the NYSE, all trades occur in a physical place on the trading floor in New York City.

The Nasdaq, on the other hand, operates out of a telecommunications network through an elaborate system of companies electronically connected to one another.
 

Auction vs Dealer Market

In the NYSE, buying and selling is carried out through an auction process. The highest bidding price will be matched with the lowest asking price .

NasdaqThe Nasdaq  on the other hand transact the buying and selling process through dealers.  

Ensuring A Smooth Trading Market

The specialists in NYSE and the market makers in Nasdaq are in charge of matching up buyers and sellers to keep the flow of trading going. They help ensure a smooth and orderly markets for clients. Similar to traffic control , they will work to match the bidders with the askers to ensure the completion of as many orders as possible every trading day.

Perception of Stocks

As there are many blue chips companies listed on NYSE , the companies here are perceived to be more well established and more stable.

The Nasdaq attracts many of the businesses dealing with electronics or the internet. While the stocks are perceived as belonging to the high-tech market, they are considered to be growth oriented but more volatile. 

Other than United States, there are many stock exchanges located around the world. The two other main stock exchanges are financial hubs are London Stock Exchange in London , UK and  Hong Kong Stock Exchange  in Hong Kong, China.

Many investors look at the foreign markets with envy when indexes in some of them produced up to triple-digit returns . The RTS Index in Russia gained 72% in the first nine months of 2005 while earlier on in 2003, the SETI 100 in Bangkok rose a whopping 117%.

With electronic connectivity so highly developed now, it has become much easier to buy or sell overseas stocks. As such, opportunities to make it rich  is no longer restricted to local market now.

 

 

Related Articles :

What Is Share Market - Key Fundamentals Before You Trade

What Are Shares

What Are Shares Classification 

How To Pick Your First Stock?

Stock Investment For Beginners

  

 

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