How Stock Markets Operate
Understand how stock markets connect buyers and sellers and why prices move when supply and demand change.
The stock market is the system where shares of companies are bought and sold by investors.
It is not just a big screen with numbers, it’s a mechanism built to help companies raise capital and investors trade ownership.
How it works:
Companies list their shares on a stock exchange so investors can buy them.
Buyers and sellers place orders; when one is willing to buy at a certain price and one is willing to sell at that price, a trade happens. … That price discovery is driven by supply (sellers) and demand (buyers).
Shares are traded on exchanges and sometimes off-exchange (over-the-counter). The rules, regulations and trading hours depend on the exchange and country.
Prices move because investors update their expectations about a company’s future earnings, risk, broader economy and other factors. More buyers → price up. More sellers → price down.
Why it matters to you:
Understanding how the market works helps you see beyond ticker symbols. You’ll recognise that prices aren’t arbitrary—they reflect collective investor expectations and information flow.
Bottom line:
Think of the stock market as a large, organised marketplace for ownership. Knowing how it works gives you a clearer view of what’s happening when you buy, hold or sell stocks.