Before we jump into the early days of the stock market lets understand few basic things about the stock market. Upon reading this article you will able to understand nowadays how life become easy going. Stock market is all about buying and selling shares. Shares of different companies where investor do study perform investigation and research on company’s core business assets, financial data etc.
If investor is interested in buying and selling stock in any publicly traded company then they are most likely need service of a brokerage firm. However, investor can directly execute his trades but to do so he should be legally licensed, to do. There is multiple legal approach and problems exist. The investor can’t sell his securities directly to the public unless and until the investor is licensed to do so.
To avoid any boring process of getting the license, and time-consuming process. Investors always prefer to place order via the trusted source. These trusted sources are the stock dealers who are licensed to execute investor’s trade. These stock dealers act as agent who will buy or sell shares for traders and investors. These agents are called as stock broker.
Most of the trades place trades via stock exchanges. These stock exchanges simply allow their clients to place buying, selling orders. Stock exchanges are special markets where buyer and sellers gather together to execute security trades. Best-known stock exchanges in the world are NYSE, NASDAQ, LSE, TYO, NSE, BSE etc.
When people think about the stock market, a strange picture pop ups in their mind with crowd people are struggling for their positions, shouting on each other’s, making funny hand actions and writing stock scripts on a piece of paper which they are holding since a long time. However, it’s a methodical and organized system of trading, where stock prices are clearly defined by supply and demand rules only.
Investor who regularly performs trading the phenomena is quite simple and straight forward to him. Investors prefers to hire full time stock broker. Investors place their stock trade via broker. Now days these orders are accepted on a telephonic conversation.
Let’s take example, William is a stock investor. One morning he wakes up and based on his stock analysis and investigation which he did in last night on company’s core business, financial data, balance sheet. He decides to place order of buy shares of company apple.
He can simply make a call to his stock broker and ask them to place order for him say, 500 shares of apple. Very next couple of minutes Williams receive the message on his mobile notifying him about the details of the executed trade. Once investor does a phone call to buy 500 shares of Apple Company. Then what happened behind the scene?
Let’s Know How Stock Trade were Executed in Early Days
- First of all, the investor will call to the stock broker to place his order for 500 shares of apple company.
- Broker will forward investor request to firms order confirmation department.
- Then order request forwarded to the stock exchange to execute this trade.
- This call is then transferred to the trader who is working on the same floor.
- Then trader calls to the specialist to search for the seller who is willing sell their stock holding.
- Specialist found Michael who is more interested to sell his current holding of apple shares
- Then specialist discusses with Michael on the price, and if trader agrees on a price then order used to get executed.
- This order confirmation then forwarded to investor William who placed order via phone call.
- Now William will receive the message on his cell phone stating that he is a new owner of apple Order which has been executed successfully.
- Now days trading does not happen on the floor, as long as your connected to the world of internet you can place your order electronically by apps, or website.
Now days stock trading is just finger step process. You just need to slide your finger on your smart phone screen and your trade will get executed. Many brokerage firms are coming with the advance and latest techniques so that investors do not face any sort of problem. You can download the app provided by broker on your smart phone and then you can start trading in live stock market.