How Do Companies Trade?


Stocks are bought and sold on stock exchanges where buyers and sellers meet to decide the price of shares and trade them. Such exchanges are made of brick and mortar. Stocks are bought and sold on the trading floor. We have often seen footage of traders in blue jacket wildly wave their hands, gesticulating and trying to out-shout each other. This type of exchange is called a physical exchange.

Another type of exchange is a virtual replacement. It consists of a network of computers where stocks are traded electronically. Traders can buy and sell shares from the comfort of their homes with computers and the Internet.

The purpose of the market is to facilitate the exchange of securities, in other words, to buy and sell shares. A stock market is like a super-sophisticated farmers market that brings together both buyers and sellers of shares. You can imagine how difficult it would be to find customers to buy shares in your neighborhood. It might not be easy to find one, even if you advertise in the local media. Even if you find customers, it would still be difficult to sell his stock a trade requires certain formalities can be performed only with good brokerage firm.

Stock Exchange solve the problem of buying and selling stock.

The stock market is of two types, primary market and the secondary market. The primary market is one where securities are created through IPO. When things have been issued, they are traded on another market called the secondary market. So is the place where investors trade with the previously issued bonds without the participation share of the issuing company, by market. When we talk about the market, we are referring to the secondary market. It will also understand that in stock trading company does not directly involve the company itself.

There are three major exchanges in the United States. They are the New York Stock Exchange-NYSE, National Association of Securities Dealers Automated Quotations, or NASDAQ and the American Stock Exchange -AMEX.

The New York Stock Exchange

Also called “Big Board”, the NYSE is the most prestigious exchange in the world. Founded in 1792, more than two centuries back, the NYSE is an example of physical time. It is listed exchange and provides a market for the shares of some of the largest corporations in America including as General Electric, McDonalds, Citigroup, Coca-Cola, Gillette and Wal-Mart.

Orders come in through brokerage firms that are members of the exchange. Stocks are available on site called trading post. It is a specialist that matches buyers and sellers. The current price is the highest price that any buyer is willing to pay and the lowest price is that the seller is willing to accept. When a business has been established, the information sent to brokerage firms. Computers do play an important role in NYSE. The trading floor exchange is located at 11 Wall Street and is comprised of four business units.


The NASDAQ is a perfect example of a virtual stock exchange. It is also called over-the-counter market. Trading on NASDAQ is done electronically via computers and telecommunications networks traders. NASDAQ article shares some of America’s big technology companies such as Microsoft, Cisco, Intel, Dell and Oracle. The brokerage firms act as market makers for various stocks on NASDAQ. The market for providing continuous bid and ask prices. Assessments are kept to meet the demands of investors.

The American Stock Exchange or AMEX

AMEX is the third largest stock exchange in the United States. It provides for trade in small cap stocks and derivatives.

If you want to do stock trading you will find brokers that will do to buy or sell shares. It is a stockbroker who does all the work to buy and sell shares for you. All you have to do is open an account with him and placing orders.


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