Stock Exchange: How it Works?

The stock exchange is a marketplace for stocks. Stocks are financial instruments representing ownership shares in an organization and can be bought, sold, or traded on the open market.

The stock market is where traders buy and sell these stocks at prices that they deem appropriate. For example, if you think Company X will do well over the next few years, you may purchase their stocks now to capitalize when they rise in value later on.

Conversely, suppose you believe Company Y’s business has been declining for some time and won’t recover anytime soon. In that case, you might consider selling your shares before the price drops any further.

This blog post will go over what the stock exchange is and how it works within our economy!

What is the stock exchange?

The stock market, or simply “the market,” consists of an electronic system that matches willing buyers and sellers. For example, when somebody wants to buy a particular stock at a given price (which may be higher than its current trading price), he submits this order as part of his bid for security.

Similarly, when someone wishes to sell one share but doesn’t care what price it gets in return, they merely offer their claims on the open market with no prior expectations about value.

If both these orders are submitted simultaneously, these two parties will execute the trade; after that, ownership of those shares changes hands from seller to buyer following mutually agreed-upon terms set forth by contract law!

In other words, the stock exchange is an organized marketplace for traders to trade stocks.


What are stocks?

A security that represents ownership in a company and can be bought or sold on the open market. The buyer has the legal title of the shares (right) until they decide to sell them, at which point whoever buys those shares takes over as their new owner and becomes responsible for paying any dividends owed.

A “share” also refers to one unit of share capital issued by a corporation, with each share representing equity in that corporation’s assets and earnings; it does not entitle you to direct involvement in running the business!

Instead, you buy these stocks through your brokerage firm or directly from companies like Apple; after that, their price will fluctuate according to how well it’s doing.


There are two main types of stocks: common and preferred.

Common stock entitles the owner to vote on company decisions, receive dividends if they’re declared by the issuer’s board, and be paid in case the company goes bankrupt (meaning that all remaining assets would go toward paying off its shareholders).

In contrast, Preferred stockholders may not have voting rights or an entitlement to dividends, but these shares pay a fixed rate of interest which is generally higher than for common stock! T

They also prioritize receiving any payout upon bankruptcy, so this type of share tends to be more popular with investors who want stability rather than risk as part of their investment portfolio strategy.

Now, this was all about the Stock Exchange. Now, if you want information about the South African stock exchange, visit JSE All Share Index!

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