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Investing

What is the stock market?

The meaning

Not really a physical place. It’s a system where people buy and sell a company’s stock shares (and ETFs, mutual funds, and REITs too). When you buy an investment through a brokerage account (see below), you’re participating in the stock market. Large online exchanges like the NYSE and Nasdaq are where most of this activity happens. More in What the Heck is the Stock Market?.

Example
  1. SellerWants to sell
  2. MarketMatches the trade
  3. YouBuy through your brokerage
Every trade has a buyer and a seller. Prices move as they meet.
Walk through the numbers

When you buy a share through your brokerage, you are buying it on the stock market from someone who wants to sell. Prices move all day as buyers and sellers trade.

Why it matters

Understanding that prices move with supply and demand makes daily swings feel less personal.

Read: What the Heck Is the Stock Market? →

Related terms

StockA small slice of ownership in a company.Bull and bear marketsA bull market is when prices are rising. A bear market is a drop of 20% or more.Index fundA fund that simply tracks a market index instead of picking winners.Market crashA sudden, steep drop in stock prices over days or weeks.

See all 34 terms · Read the full glossary

For education only and not personalized investment advice. Examples are hypothetical illustrations, not a prediction or a promise of results. All investing involves risk, including the possible loss of principal.