Types of Stock Markets

Most of the stocks are traded in stock exchanges. Stock exchanges are places where sellers and buyers of various stocks meet and agree on a fixed price of these stocks. Some of these exchanges are have physical offices and perform the trades on a trading floor. The picture of a trading floor is very common, with traders constantly checking multiple monitors, taking with each other and looking on the charts. Another type of stock exchange is virtual stock exchanges. The virtual exchanges include network of multiple computers. Traders make their trades electronically in virtual markets.

The main purpose of the stock exchanges is to host the exchange of stocks between the two parties. The concept of such exchanges has made the stock trading process very easy. Otherwise, we may have to find the buyers or sellers ourselves, which is very hard for an ordinary individual. A stock market is nothing more than an ordinary market, linking potential buyers and sellers, but with a great deal of complexity.

Most of the starters become confused with the secondary and primary stock market. To make this simple, keep it in mind that the primary market is the place where the stocks are created, I mean the IPO of a company is issued. Secondary market, on the other hand, is the place where buyers and sellers trade the previously-issued primary shares. When someone is talking about stock market, most of the time it is the secondary market he is talking about. It is also important to remember that the trading of a specific company’s stock does not involve that company directly.