What is a Stock Market?

Don't be intimidated by the stock market. Here's a breakdown of what it means so you can be comfortable dipping your toes into investing.

What a stock market really is, explained

A stock market acts like a normal market, where buyers and sellers meet to buy and sell shares of publicly listed companies.

It's a primary dealing ground for companies and corporations who issue their shares and stocks to the public for the first time through the process of an IPO (initial public offering).

Once newly released stocks have been sold through an IPO, users can buy, sell, and trade shares through stock exchanges. There are many factors that impact the share prices of the company (like profit, future growth, industry, and overall market sentiment).

Currently, there are multiple stock exchanges in the US, but only 2 major ones: the New York Stock Exchange (NYSE) and Nasdaq. 

What are the functions of a stock market?

Stock exchanges ensure that participants have:

• Instant access to stocks and shares

• A chance for fair trade and transactions in the market

• Efficient matching of buy and sell orders

Stock markets support price discovery and assessing the cost of shares based on supply, demand, and other factors. They ensure that participants follow the rules and stay within the legal framework of domestic regulators. Many investors are inexperienced or not professionals, so stock exchanges implement measurements to guarantee financial security for the general public and maintain their trust.

How to access a stock market

You can freely access public stocks and buy and sell shares, mutual funds, and bonds through your brokerage account. Brokerage accounts act as intermediates between investors and the stock market.

US stock market hours

Regular trading hours for the US stock market, including NYSE and Nasdaq, are 9:30 a.m. to 4 p.m. ET on weekdays (except stock market holidays). On early-closure days, right before or right after some market holidays, stock trading hours end at 1 p.m. ET.