The stock market is where investors and brokers exchange shares of companies for money, or vice versa. It’s the primary way that public companies raise funds to grow their businesses and pay dividends to shareholders. The market’s participants include individual retail investors, financial institutions (e.g., banks and insurance companies), mutual and exchange-traded funds, and robo-advisors.
A share of a company’s stock represents partial ownership of the company, and its price fluctuates based on supply and demand. When demand for a particular stock outweighs supply, its price rises; if supply outweighs demand, its price falls. A company’s profitability and growth potential also influence its share price. Successful product launches and innovations, for example, can boost a company’s revenue and profit potential and hence its stock price.
In addition, the stock market is regulated to protect investors from fraud and other bad practices that could hurt their investment. For this reason, opening a brokerage account is the first step for anyone interested in investing in stocks.
Once you decide on what stocks to buy, follow the prompts in your investment account to place a buy order. You’ll need to enter the symbol for the stock, the number of shares you want to buy, and the type of order you want to execute—e.g., a market order will match you with the next available offer; or a limit order can let you specify the maximum price you’re willing to pay for the shares.
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