Written by The stock market works by providing a platform for buying and selling stocks (shares of companies). When a company decides to go public, it issues shares through an Initial Public Offering (IPO). Investors can then buy these shares, effectively becoming partial owners of the company. As shares are bought and sold, their prices fluctuate based on supply and demand, influenced by the company’s performance, overall market conditions, and investor sentiment.
The stock market is typically made up of exchanges like the NYSE and NASDAQ, which are marketplaces where stocks are listed and traded. Investors use brokers or online platforms to place orders. There are two main types of orders: market orders, where the stock is bought or sold at the current price, and limit orders, where the stock is bought or sold at a specified price.
Market conditions, corporate earnings reports, interest rates, and global events can all influence stock prices. The stock market enables investors to profit from price increases (capital gains) or income from dividends.
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