The stock exchange is a place where people buy and sell shares of companies. When you buy a share of a company, your kind of like a tiny owner of that company. You get to share in the profits that the company makes and you can sell your share to someone else if you want to. The stock exchange is kind of like a big, crazy auction. People always buying and selling shares, and the prices go up and down all the time depending on how much people want to buy or sell - supply and demand. If lots of people want to buy a share, the price goes up. If lots of people want to sell a share, the price goes down.

The prices can change loads in just a few minutes. Some people make a lot of money on the stock exchange, but other people lose money. It's a bit like gambling.

this was honestly really helpful !! thank you so much :)

Your very welcome!

Company ask 4 money, people give money in hopes they get more money, if company is good with the money they gave them, they could get 90% or 110% back in a day or 700% back in 60 years.

I'd add to this that people don't always get a share of the profits, known as dividends, only certain companies pay out dividends.

And also the price is partly affected by things like the estimated value of a company both now and down the line in a few years. Things like good news of expansion or new products will help the price while bad news like recession or increased fuel prices will reduce the price.

For example during covid most companies went down in price because they weren't allowed to open, while PPE companies increased because of both being allowed to operate and increase in demand.

Stocks are ownership shares in a company. Anyone can buy a share in a public (ie available to the public, a simplified definition) company. For example owning 100 shares on issue of Company X out of 1000 total shares gives you a 10% ownership stake. You’re entitled to 10% of the dividends paid out of profits, and can vote at shareholder meetings etc.

A stock exchange is a market that matches buyers an sellers of company shares (“stock/s” and “shares” are generally used interchangeably). It facilitates transactions between different shareholders and stands in the middle of a buy and sell trade to effectively make it happen (now with technology backing these transactions to make it all run smoothly, again a simplified example).

At any given time there will be buyers and sellers of a stock at certain prices. For example if Company X stock last traded at $100, on the stock exchange there may be bids to buy at $99 and offers to sell at $101 - in order to transact on either side you need to “cross the spread”, which will move the price up or down by 1%. This is how stocks move. Smaller stocks generally have wider spreads, trade less, and therefore are more volatile than larger stocks.

Traditionally to access a stock exchange you needed a dedicated broker (a real person at a company) but now with technology virtually anyone can access the market cheaply and easily via online brokers, at least for individuals trading relatively small values vs institutional shareholders.

The stock exchange is where companies willing to publicly sell off ownership of their companies do such trades (they have to be approved of course, and follow a lot of regulations). In America the 2 largest ones are the New York Stock Exchange located on Wall Street, and the NASDAQ which is digital.

These pieces of ownership, shares, sometimes allow you to have voting rights as well as receive profits, dividends, which are in-line with the % of the company that you own. Now, not all shares come with either/both, so just do some research (you can just Google: “Does Apple stock pay dividends?”). You could cash out these dividends, but since it usually is a few pennies/bucks for most people, they instead choose to opt-in/enable a feature called Dividend Reinvestment Plan (DRIP), where they money is instead used to buy more shares of that company, that way you earn more shares and also earn more dividends, and this repeats and repeats (you could do this all manually especially since nowadays it is commission free and fractional shares can be bought; it used to be much more appealing before this, as now you could take the money and buy fractional shares in another company if you wish).

A broker is a person/app that handles the transactions (think Leonardo DiCaprio in Wolf of Wall Street); you yourself can’t just walk up to the NY Stock Exchange on Wall Street and do business). Historically brokers have charged commission fees but now most are free (they make money from offering other services, such as financial advising, they also require the money you wish to use to make purchases to be in their fund for them to invest in, rather than just charging your bank account).

Just to note, not all stocks pay dividends. For instance, Apple does but Amazon does not.

Yes, I should've added that. Thank you.

People say they want to buy or sell certain financial instrument for certain value, and the exchange matches up the trades while collecting its fees. Simple in principle. Also, an exchange doesn't just trade any stock, its picky about what it lists and what it doesn't. If you wish to trade non-listed stock you got to go find your own trade partners.

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