A stock market is an umbrella term for a country or region’s public exchanges where shares of companies are traded. A share represents part ownership of a company, and the value of those shares rises or falls as the fortunes of the business change over time. The market itself is based on supply and demand, with a variety of factors influencing the price of shares. These factors fall into two main categories: fundamental and technical.
A company can issue shares to raise money for expansion or as a reward to investors. Investors can then buy and sell those shares among one another on a publicly-traded market. The companies may be as small as a local shop in your city or as large as a multinational corporation, and they may be public or private. A private company might have shareholders, but those shares are not available for sale on the market.
Individual retail investors, such as yourself, are a major group of buyers and sellers. But so are large institutions, such as retirement and pension funds, mutual funds, banks, insurance companies, endowments, hedge funds and corporations themselves. Robo-advisors that automate investments for individuals are also a major player.
The stock market operates on the premise that buyers and sellers will always find a match, but the speed at which shares are bought and sold can be volatile. As a general rule, if the number of people willing to buy shares exceeds the number of those willing to sell at a given price, then the prices will go up. If the opposite is true, then the prices will fall.
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