What Is a Stock Exchange?

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A stock exchange is a market place where traders and stockbrokers buy and sell securities. A stock exchange is also referred to as a bourse. Here, a company can list its securities, such as stocks and bonds. Stockbrokers, on the other hand, can purchase these securities from a company.

In order to run a successful stock exchange, participants must follow regulations and follow rules to ensure that buyers and sellers are legitimate. This helps to reduce default risks and provides protection for investors. The stock exchange also categorizes stocks by risk level, which promotes consumer confidence and protects less experienced investors. To keep a track of market activity, you can follow stock prices through your brokerage account.

Many banks and companies utilize securities identification numbers (ISINs) to identify securities. ISINs are unique identifiers for securities issued by companies and governments worldwide. However, many investors lose money in stock investments if the underlying companies have a poor financial or ethical record. If a company’s management team is incompetent, significant share price declines can result.

Stock prices are determined by market forces such as supply and demand. Many factors influence the stock price, including fundamental factors, such as revenue and earnings per share, as well as technical factors, such as industry performance, liquidity, and trends. Sentimental factors, such as speculation and reaction to news releases, also affect the price of stocks.

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