What is a Stock Market?


In the newspaper, I read about the stock market going down. But what is Stock Market anyway?

Like any other market, a stock market is a place where stocks are bought and sold.

So is it a place like the supermarket, where I can go and buy stocks?

The stock market is not one single physical market. It is a collection of all the stock exchanges where stocks can be traded.

Can only stocks be traded in the stock market?

While the trading is primarily in stocks, other financial securities like exchange traded funds or ETFs, derivatives, commodities, currencies, etc are also traded in the stock market.

So when someone says the stock market is going up or down, what exactly does it mean?

When people say this, they are usually referring to the stock indexes – which are used to provide a snapshot of the stock market. Some examples of popular stock indexes are the Dow Jones Industrial Average or the Dow, S&P 500 and NASDAQ.

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