Understanding the major stock exchanges and how they work is important for a stock broker or investor to make successful trades because most stocks are bought or sold on exchanges. Very different from the Forex market, the stock exchange is a place where stock brokers and traders can buy and sell shares, securities, and bonds.
There are two types of stock exchanges; physical and virtual. In a physical stock market, there are people frantically shouting and waving, trying to signal one another. On the other hand, a virtual exchange is all about computers, the Internet, and electronically executed trades.
The stock price is determined from the flow of its orders as tracked and recorded by the exchange. This flow of orders is more like supply and demand. Let us say the ‘bid price’ on a share is $100, it means that there is a trader telling the stock exchange that they want to buy the stock for $100. If at the same time the ‘ask price’ is $102, it means someone else is ready to sell the stock for $102. The difference between the two prices is the ‘bid-ask spread.’
These Are The Major Exchanges In The Sector
In terms of both exchange trade value and exchange market capitalization, NYSE Euronext is the largest exchange. After the prestigious exchange secured Archipelago in 2006 and Euronext in 2007, it went public. It is auction-based, meaning there are physical specialists present, who specialize in particular type of stocks. To be listed on the exchange, companies must meet initial requirements and follow rules and regulations governing the market.
Nasdaq (Electronic Exchange)
The Nasdaq, also known as ‘screen-based exchange’ is an electronic exchange with buyers and sellers connected by computers and smartphones over a telecommunications network. Market makers are required to post their ‘ask’ and ‘bid’ prices then stay ready to buy and sell the stocks.
Tokyo stock exchange is considered to be the third-largest stock market and the biggest non-public-traded exchange. The market is a joint stock corporation whose shares are closely held by member corporations like banks and brokerage firms.
London Stock Exchange
Hong Kong stock exchange
Like Hong Kong Futures Exchange and Hong Kong Securities Clearing Company, it is a dependency of Hong Kong Exchanges and Clearing Limited; a publicly traded company.
Shangai Stock Exchange
The exchange, which exists as a non-profit organization, is the world’s largest stock market to be under the ownership and jurisdictions of the government. It is run by the China Securities Regulatory Commission. The market has a reputation for strictness when it comes to listing requirements.
Over-the-counter (OTC) markets. OTC lists small corporations. Investors shy off from OTC stocks because it is known that most companies in the OTC have been delisted from Nasdaq.
For stocks to be traded, they must be listed on an exchange market.
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Stock Exchange Tips On YouTube
We have compiled a list of best tutorials about stock marketing and investing in this YouTube Playlist.