Stock Market the market place for shares and derivatives

The traditional stock market was a trading facility for shares of companies called the stocks; hence the name stock market. The early stock markets were trading only penny stocks but some stock markets of the present day trade in both equity and derivatives. The market share of the derivatives is very much larger than the market share of the equity at present. Derivative market is dominated by oil as the prices of oil fluctuate very often.

Stock markets in different countries function in a few different ways. The oldest way of carrying out transactions in the stock market was the open cry method. In this method once the stock broker is informed of the desire of an investor to purchase penny stocks at a certain price he will wait until that stock is up for sale and bid for it quoting the price his client is prepared to pay. In case there are no other bidders he will get the stock. If there are other bidders who quote higher prices then he will have to enter into a contest if his client allows it. Finally the seller and the buyer will come to an agreement on the price for the quantity of stocks available for sale. If there are more than one bidder on the same price the sale is done on first come first served basis. This system is called the open cry system. New York stock market works on this system.

The other system is to use computer for bidding and finalizing the transaction. In this system there is no physical trading floor. Instead the transactions are done by computer. The buyers request and the seller’s agreement are matched with the help of a computer system and finally the deal is closed with the computer system. NASDAQ is a system like this. To facilitate working out the deal several companies get involved supplying services, Check Norway Loans for more information about their share markets too