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How the Stock Exchange Works

How the Stock Exchange Works

Stock Exchange is a place, where supply and demand meets. During the last couple of centuries the mechanism of exchange was constantly improving and at the moment all the trading between parties occurs online. The goal of the stock exchange is to create the opportunity for investors, traders and other market participants to buy and sell different type of securities. Here’s the video that fully explains the basic principle of how the stock exchange works:

If you trade on the American exchanges, the trading hours will be between 9:30 AM – 4:00 PM EST. The goal of the market participants is to create wealth from trading securities with other parties. In order to begin trading, you need to open the brokerage account. We at Arbitrage Trades can help you with all the documents needed to open an account and could offer you the best trading conditions that are in the industry right now.

Types of Stock Exchanges

Stock exchanges trade shares of the public companies. The only difference between besides their rules is their geographical location. Majoe exchanges like NYSE and NASDAQ are located in New York, while CME is from Chicago and LSE from London.

If the stock trades on different exchanges, the arbitrage opportunity appears. Most of those stocks correlate with each other, while other non-liquid companies are opening the buying opportunities for traders.

Each stock exchange is regulated by the law of the country in which it resides.

The basics of Trading

In order to get access to the stock exchange, the person needs to have a licensed representative that will help him to transfer his orders into the market. As we described above, our company can provide those services to you, if you’re interested.

Before placing orders, trader needs to understand the instruments that he’s trading, their level of risk, volatility, insider activity etc. All of that determines whether trader will be successful or not. You should remember that trading stocks shouldn’t be seen as a gamble, but rather as an possible career opportunity for those, who have a deep passion for finance, economics and markets overall. In order to achieve your goals and make a living out of trading stocks, you need to imply research, fact finding and due diligence. If you have problem at understanding it, you can send us your message to start@arbitragetrades.com and we will try to answer you as fast as possible and recommend different trading techniques that might help you to increase your chances of success in this industry.

American Stock Exchanges

The most liquid and well-known exchange is New York Stock Exchange (NYSE). With the glorious history that dates back to 19th century, it is the exchange for major companies like Boeing, Exxon, Chevron, JP Morgan and others. The second well-known exchange is NASDAQ, which was created a couple of decades ago and executes its orders solely online. With the big infrastructure and own data center, NASDAQ is considered to be one of the most high-tech exchanges in the world and is a place for tech companies such as Facebook, Apple, Alphabet and others.

There are also other less known exchanges like AMEX, BATS, OTC and others. For more about then, you can read here.

Американская фондовая биржа