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A stock market is a meeting of buyers and sellers of assets in the same area.  This is also known as an equity market and is considered a crucial part of the free-market economy.  Stock markets allow companies and/or individuals to use capital in exchange for a slice of ownership. With a stock market, it is traded on a platform and lots of it is virtual.  For example, In the UK, there is a lot more gold stock than there is gold. If everyone who owned gold stock decided to exchange their stock for gold then there would be a gold shortage.

The main idea of a stock market from an investors point of view is to buy cheap and sell high however you could also end up losing money as at the end of the day there is a bit of luck and chance.  Companies trade on the stock exchange in order to raise capital as it costs money to buy stock.

The stock market is split into 2 different parts;

Primary Market

This is where the new assets are first sold through IPOs (Initial Public Offerings).  Most of these are purchased through investment banks.

Secondary Market

This is where trading happens after the initial offerings which includes institutional and individual investors.



When you buy stock, you effectively own a part of the company, even if it is 0.0000001% of the company.  if you own more than 50.001% of the company then you have control of the company.


Stock Market Regulators

The US Stock Markets are regulated by the SEC (Securities and Exchange Commission) with other stock markets having similar over-ruling bodies.


Web-links are provided below which explains stock markets in more detail: