The most common picture that comes to mind when people hear
about stock trading is the one we see in movies where men in suits basically
shout and wrestle each other in some huge New York building to bicker about
money. Although to some extent, there is some truth to this image, trading in
the stock market is actually a more complex concept that helps many people earn
money and keep businesses alive.
The concept of trading fundamentally consists of the buying
and selling of stocks among individuals or companies through brokers. Through
buying a share of stock or a share of ownership in a particular company, an
individual can then benefit and earn money from however the company they
invested on may fair in the market.
There are two basic methods in which the stock market
operates –on the exchange floor where buying and selling is done more
traditionally and electronically where technology takes on the exchange game.
Trading On The Exchange Floor
The trading that occurs on the more traditional exchange
floor of the New York Stock Exchange (NYSE) is basically what most of us have
become accustomed to from seeing it in the movies and on television. Basically,
the NYSE consists of many brokers who negotiate the deals for individuals to be
able to trade stocks.
As chaotic as the stock exchange floor may seem, there is
actually a common pattern that occurs among most simple trades. First, an order
to buy a certain number of stocks would be negotiated through a broker. After
this, the broker’s order department would forward this arrangement to their
floor clerk on the exchange. The floor clerk would then inform the company’s
floor traders in order to find other traders that are willing to sell the equal
number of stocks from the company that is offered to be bought. After the two
parties agree on a price and close the deal, the message would be forwarded
back up the line, and the broker would then inform the interested buyer on the
final price.
No comments:
Post a Comment