How to Trade

To understand how stocks are traded, you should be familiar with the stock exchange concept. The purpose of the stock market is to link buyers and sellers. In short, the stock exchange is where people can buy and sell stocks. These are two types, physical and virtual. Names denote their types and the differences between them.

Physical Exchange

Physical Exchange is a place where stock trading is conducted through the open outcry system in the trading floor. You have to see images of body exchange on the TV, or in the movies, people frantically stretched out their arms, spoke on the phone, waved, or gestured fairly. The best example of a physical exchange is the New York Stock Exchange (NSYE). As an exchange member of the brokerage firm, the stock is placed at the location of the order and then passed to the presence of the trading station on the estate agent. The job of these floor brokers is to match buyers and sellers. The price of the stock is determined by the auction; the highest price a person is willing to buy and the lowest price a person is willing to sell. Once the transaction is completed, the underlying broker sends detailed information to their representative brokerage firm.