Every trader needs to know how to understand the stock market before you can start trading.
Basically, most stocks are being traded on central exchanges.
These are the places where buyers meet sellers and decide on a price.
These exchanges can either be physical locations where trading transactions are carried out on a trading floor or virtual locations where trades are made electronically through a network of computers.
The primary purpose of the stock market is to assist the exchange of securities between the buyers and the sellers.
In this process, the risks of investing are reduced.
The stock market acts as an essential and sophisticated link between buyers and sellers.
It is divided into two major parts.
These are the primary market and the secondary market.
The primary market is where the securities are issued by the company itself.
In the secondary market, traders buy and sell previously-issued securities without the involvement of the issuing company.
This is the more popular market and it is what people are referring to when they say stock market.
It is important to remember that trading a company's stock does not directly involve the trader to that company.
There are many stock exchanges that are located in just about every country around the world.
The New York Stock Exchange proves to be the most popular stock exchange today.
This is where you can trade stocks of companies like General Electric, McDonald's, Wal-mart, among many others.
Virtual exchanges have also become extremely popular like the Nasdaq.
When you finally get a good grasp of how to understand the stock market, then you are on your way to becoming a good stock trader.