The stock market is where buyers and sellers come together to trade shares in eligible companies.

Almost anyone can invest in the stock market. In the United States, investors must provide a Social Security number and other personal identifying information in order to purchase stock.

One of the best ways for beginners to get started investing in the stock market is to put money in an online investment account, which can then be used to invest in shares of stock or stock mutual funds.

The stock market is where the general public can access stocks of publicly traded companies. They function kind of like a farmers’ market, with buyers and sellers meeting in one place to exchange things. But stock markets are much more complex and regulated, with prices that can change rapidly. Here are three key activities you’ll find on a stock market:

1. Stock buying: Both everyday retail investors and sophisticated institutional investors can purchase shares of companies.
2. Stock selling: Every stock trade has a buyer and a seller.
3. Issuance of stocks: If a private company wants to raise money, it may agree to sell a portion of its ownership on the stock market. This is what happens during an initial public offering (“IPO”). If an existing public company wants to raise money it may do so through a secondary public offering. In both cases, after the stock is issued, it can be bought or sold by the public (see those first two bullets above).

Stocks aren’t the only thing that can be bought or sold on a stock market. Other “securities”, such as exchange-traded funds (ETFs) or REITs are also traded on the stock market (some details about how they’re priced or traded differ though).

Yes. If you invest in the stock market, it’s important to keep in mind both the short-term and long-term risks. Just as stock prices can rise, they can also fall. Sometimes by a lot. The price of a stock can drop to $0, and this may result in the total loss of an investment. Given this risk, investors should have a thoughtful strategy in place to help guide their decisions.

The primary role of the stock market is to bring buyers and sellers together to negotiate the trade of stocks. To determine the price, a stock market operates kind of like an auction.

Buyers want to pay the lowest price possible. Stockbrokers who want to buy (or who represent customers who want to buy) can bid a price they’re willing to pay for a stock. The highest price becomes the “Best Bid.”

Sellers want to sell at the highest price. Owners of stock or their stockbrokers can show their willingness to sell by placing an ask, which is the price they’re willing to sell a stock for. The lowest price becomes the “Best Ask.”
The difference between the Best Bid and Best Ask is called the “Spread.” The two sides negotiate to meet in the middle, and the intermediary who executes the trade takes the difference as their fee.

As you follow a stock, you’ll notice the share price moves. The share price can change frequently based on the number of investors looking to buy or sell the stock and the number of trades that happen.

Stocks are traded on an individual basis through the negotiation between the bid and ask prices. Those prices can move together with stocks of other companies as economic, political, and specific news stories affect the movement of markets in general.

Here are some of the key players you should know about:

1. Retail investors like you can buy or sell individual stocks through your brokerage account. When you place an order, it’s sent to exchanges where the trades are executed.
2. Stockbrokers are “registered representatives” who have gone through training and passed a licensing exam. They can buy and sell securities on behalf of investors. Stockbrokers work for brokerages, which can act as principals or agents in transactions, making money through markups/markdowns (as principals) or commissions (as agents) on trades. Many brokerages charge fees to their customers who use the brokerage to place orders and execute the trade of a stock.
3. Portfolio managers act like restaurant owners — they’ll order a ton of food because they’re feeding plenty of people. Portfolio managers make large orders to buy and sell stocks because they manage relatively large stock portfolios, which can be owned by other investors like you. If you own shares in a fund (a mutual fund, retirement fund, pension fund, etc) a portfolio manager likely handles the bundle of underlying securities (stocks, bonds etc.) in the fund’s portfolio.
4. Investment bankers help companies list shares on stock exchanges.