Stocks and securities are traded through an entity called as stock exchange market. Using a stock exchange market is the method in which shareholders or companies issue and redeem securities, pay dividends or income or deal with other financial securities. There are various types of securities traded on a stock exchange market, such as commodities, pooled investment products (banks – mutual funds or retirement holdings), stocks, and company issued shares.
In order for securities to be traded on a stock exchange market, they need to be listed. The massive electronic network now known as the modern stock exchange market allows for instantaneous sales, purchase and trades.
Supply and demand is the very basic idea behind the modern stock exchange market. Simply put, the more demand there is for a stock, the more it will be worth. This is one of the ways in which prices for stocks are determined and depending on this demand, prices of those stocks may rise or fall. Other factors also affect the price of stocks.
If a company needs to obtain some sort of financing to expand their business or fund operation of the company, one way for them to get capital is to sell shares or stocks in their company. Purchasers of this stock are called investors. When the company makes a profit, it pays a portion of the profit to the investors or shareholders. These payments are known as dividends.
There are two main ways in which stocks can be traded. One of those ways is in a physical location through verbal trading, but the most common method is electronic trading. There are not many people who actually trade in a physical location anymore, because it is more common and much easier to trade online through a brokerage site. Making trades online means you will pay a fee per trade or you may pay one monthly fee for a certain number of monthly trades.