What Is A Currency Markets?
We have to first know ‘what can be a market’ in order to understand ‘what is stock exchange.’ The phrase ‘market’ brings up an idea of a place the location where the buyers and sellers assemble to trade items in exchange for money. We now have the examples of fish market, vegetable market or cloth market and so on.
Market, in short, is a kind of arrangement in which the sellers and buyers voluntarily exchange goods or services with money. There are 2 pre-requisites for the sell to function; there have to be the sellers and the buyers. Both these parties make an effort to achieve an optimum deal. The seller wants to sell the item and create the maximum profit, as the buyer desires to buy it at an optimum price.
The primary function of the market is to find the right price.
Going by the definition from the market, currency markets is also a place the location where the buyers and the sellers from the companies’ stocks assemble to do the trading. But this trading takes place in prescribed premises called stock market. Technically speaking, a stock exchange facilitates the exchange of securities among the sellers as well as the buyers. American Stock market -AMEX-is one such instance of a stock exchange in which the stock trading takes place.
With the passage of energy and the advancement of computer systems, the concept of the traditional stock exchange has undergone a sea change. We now have virtual stock exchanges. The best example of a virtual or electronic stock market is National Association of Securities Dealers Automated Quotation System or NASDAQ.
In earlier days, the stock traders would use the thing that was called an outcry method inside the physical stock markets. They would yell and gesticulate wildly to make their point.
Now the trading is performed over a central computer which can be accessed by every stock trader at his laptop or computer through a telecommunication network. The central computer takes the orders of the buyers and sellers and matches them. When the quantities as well as the prices are commensurate together, the order is executed. The whole process occurs within a fraction of a second.
The unit of trade in a stock market is known as share. A share represents your ownership of your company whose stock you’re dealing with.
Suppose someone with technical expertise desires to start a large scale company, but won’t have sufficient funds. He advertises his promises to open the organization and provides the important points of its feasibility and success by way of a kind of prospectus. He thus invites people at large to invest in the company when you purchase its shares. This is called an IPO or even the Initial Public Offering. Anyone who buys its shares, obviously, becomes the share holder with the company.
But when you buy the shares you wouldn’t like to hold them indefinitely. You would want to sell the offending articles either at profit or at loss depending upon your needs.
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