What Is Traded
Synopsis
In very basic terms the stock market is where buyers and sellers meet and decide on a price for a particular commodity. There has to be a willing seller and a willing buyer for the transaction to be successfully completed. Previously these transactions were done at physical locations but now with the advancement of technology these transactions can be done virtually.
What Changes Hands
Typically the trading floor tends to consists of traders seemingly chaotically waving their hand around wildly while shouting out various instructions and messages. Then there is the more sedate style of trading where everything is done electronically with a network of computers.
Also simply described as the facilitating of exchange of securities between buyers and sellers it plays a certain role in reducing the risks of investing. It also provides for the arena for all interested parties to be able to conduct the relevant transactions of buying and selling.
The instructions to buy and sell stocks in a particular company will be given through a brokerage firm. This information will be passed on to those on the trading floor with the intention of linking the agreed price and commodity to the buyer and seller.
When this partnership is identified and the transaction exercise beings the virtual trading begins. Sometimes this is all done within a matter of seconds and can involve a huge amount of money.
There are several different categories of stocks traded at any given time frame. These may include common stock and preferred stock. As it denotes the common stock is an individual’s representation of a company and a claim to its profits made. The ownership of the stock allows the individual to vote on a per share basis to elect the board members but have no direct “say” over the decisions made within the company. As for preferred stock holders, this group does represent some degree of ownership but without the same voting rights and in the event of liquidation this group is paid off first nest only to the debtors.
