How Stock Market Trading Happens

Stock market trading is the buying or selling securities or commodities specifically in the stock market trading, also known as a market for the trading of publicly held company stocks as well as associated financial instruments such as stock options and stock index futures.

Each share of stocks represents a small piece of ownership in a company. The more shares somebody holds, the more part of the company he owns. And then it translates to the more dividends he can earn when the company profits.

Two basic methods of doing stock market trading:

1. Traditionally
Stock markets open while trading happens on the stock exchange floor. In which when it’s open, lots of people are seen rushing around, shouting and gesturing to each other on the exchange floor. Traders often seen talking on the phones, keeping a close eye on the consoles and entering data into terminals.

2. Modern Way
Here stock market trading happens through electronic exchanges where everything occurs online real time in the networks. This electronic market employs a vast network of computers to match buyers and sellers instead of human brokers. It’s faster and more efficient, investors get an almost instant confirmation on any trades done.

However, to get a stock market trading works, investor needs to get an investment broker first.

On traditional exchange floor, the broker orders the department to send an order to the clerk on the floor, after being asked to buy shares at the market. This clerk alerts a trader to find another trader who is willing to sell the shares the investor requested. When two traders agree on the price of the stocks, then the deal can be closed.

Notification is sent back the same way until the broker calls the investor to inform him on the final price. This process may take a while depending on the market and stocks. Days later, the investor receives the confirmation mail.

The electronic counterpart is less complicated because the stocks buying and selling are matched by computers in real time. And investors get instant updates on what happens to his stock trade.