Stock Trading System

What is Stock?If you cannot buy the company's stock at the time
You can gain ownership rights of a company byof its initial offer, you can buy it later on as well, but
investing in its stock. A stock/share is a unit of yourthe price of the share of the company will depend
partnership in the company. The value of each shareupon its performance and the supply and demand of
of the company is determined by dividing the totalits shares.
capital investment of the company by the number ofStocks of various companies are traded at stock
shares. For example, if the total value of a companyexchanges like the New York Stock Exchange
is $100 and the number of shares is five, the value(NYSE), National Association of Securities Dealers
of each share shall be $20. If you own one share,Automated Quotation (NASDAQ) and American
you have 1/5th ownership of the company. If youStock Exchange (AMEX).
want to increase/decrease your ownership of itsThere are two main types of exchanges, physical
stock, you need to buy/sell its shares. The wordsand virtual.
'stock',' share', or 'equity' are generally used toPhysical Exchange
convey the same meaning.The NYSE is an example of a physical exchange
Stock Tradingsystem where stock trading takes place face to
Stock trading, therefore, means buying or selling theface. In other words, there is a concrete building
shares of the stock of a company. Stock tradingwhere the trading actually occurs. Most people may
takes place within certain parameters of a system.be familiar with the chaotic images of the stock
For example, you cannot directly buy the stock ofexchanges on TV or in movies. Watch the CNBC
any company from the company itself. You have totelevision and you will be able to see the 'crazy guys
buy and sell its shares through a broker who iswith the blue jackets frantically wave about the
registered with the stock exchange where thepieces of paper and yell out prices'.
company is listed. The shares are sold and bought atVirtual Exchange
the market prices prevailing at a given point of time.The second type of stock trading exchange system
Again, the price of the stock cannot be determinedis the virtual exchange. The word 'virtual' refers to a
arbitrarily by the seller or the buyer. It is determinedcomputer image of a real situation. The virtual
by a combination of certain market forces comprisedexchanges are like computer networks as they are
primarily of supply and demand, which in turn, is linkedlinked to each other through the Internet. The entire
with performance of the company and so on.trading in stocks and shares takes place electronically.
Stock Trading SystemThe NASDAQ, also known as the OTC -- over the
As a general practice, it is practically impossible for acounter market, is an example of the virtual
person or a group of people to raise the hugeexchange. Since it is virtual, there is no trading floor
amount of capital, which is required to finance alike the one at the NYSE. All trading takes place
venture. In order to do so, the sponsors of thethrough a computerized network of dealers. The
company make a public announcement of their intentbrokers charge commissions both on the sale and the
to start a company and invite the general public topurchase of the shares. The stock of each company
buy its shares. The company decides upon the overallis identified by a shorthand code called symbol or a
capital required to finance the venture, the numberticker symbol. The symbol usually consists of letters.
of shares or units and the price of each share. ItSometimes it may be numbers or a combination of
then appoints brokers to receive subscriptions fromletters and numbers, for example, MSFT is Microsoft,
the public. This first step is called the initial publicC is Citigroup, and GOOG is Google.
offer-IPO.