Billions of shares change hands around the world, but what are investors actually buying, and what makes those prices move?
The stock market may seem complicated, but its basic purpose is straightforward: it brings together companies seeking capital and investors interested in owning shares of those companies.
It can be compared to a large global marketplace. Instead of trading physical goods, participants trade small ownership interests in publicly listed businesses, known as stocks or shares. When someone buys a share, that person becomes a shareholder and owns a small portion of the company.
Why Does the Stock Market Exist?
Companies can issue shares to raise money for expansion, hiring, research, acquisitions and other business needs without relying entirely on borrowed money.
Investors purchase shares for several possible reasons. They may expect the business to increase in value over time, provide dividend income, or offer a combination of growth and income. Neither profits nor dividends are guaranteed, and shareholders can lose part or all of the money invested.
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Stockmark101.com is a free educational site focused on explaining how stocks and markets work. Company write-ups reflect general market commentary and publicly available information and are used to illustrate business fundamentals and market behavior — not to provide personalized investment advice.
History and Background
Early beginnings: The foundations of modern securities markets developed gradually through European trading in government debt and business interests. Antwerp became an early center of organized financial trading during the 1500s. In the early 1600s, shares of the Dutch East India Company began trading in Amsterdam, an important development in the history of modern stock markets.
The United States: The Philadelphia Stock Exchange traces its beginnings to 1790 and is generally recognized as the oldest organized stock exchange in the United States. The New York Stock Exchange traces its origins to the Buttonwood Agreement, signed by 24 stockbrokers on Wall Street in 1792.
The shift to electronic trading: Stock trading historically relied heavily on face-to-face transactions conducted on exchange floors. Most trading is now processed electronically through high-speed computer networks, although the New York Stock Exchange continues to operate a physical trading floor alongside its electronic systems.
Stock Exchanges Around the World
Countries and regions operate numerous stock exchanges, ranging from large international markets to smaller local exchanges. The New York Stock Exchange and Nasdaq are among the world’s largest exchanges based on the combined market value of their listed companies.
According to the World Federation of Exchanges, its member exchanges were home to more than 41,000 listed companies with a combined market capitalization exceeding $137 trillion at the end of 2025. Approximately $198.5 trillion in annual trading passed through WFE member exchanges.
Trading Volume
Trading volume measures the number of shares or the dollar value of securities traded during a particular period. Large exchanges process millions of transactions on active trading days, representing hundreds of billions of dollars in combined daily activity.
Volume can change because of:
- Corporate earnings reports
- Economic data
- Interest-rate developments
- Company or industry news
- Geopolitical events
- Changes in investor expectations
- Broad changes in market sentiment
Higher volume means more shares are changing hands, but it does not automatically indicate whether a stock is attractive or whether its price will rise or fall.
Mark Notes
All stock trading is influenced by supply and demand, but saying that there are “more buyers than sellers” is an oversimplification. Every completed transaction includes both a buyer and a seller.
Prices generally rise when buyers are willing to pay increasingly higher prices to obtain the available shares. Prices generally decline when sellers are willing to accept increasingly lower prices to complete their trades. The balance between buy orders and sell orders at different prices helps determine the current market price.
It is also helpful to understand the difference between the primary market and the secondary market.
Primary market: A company sells newly issued shares to raise capital. An initial public offering, or IPO, occurs when a company first offers shares to the public. A publicly traded company may later issue additional shares through a secondary or follow-on offering. In these transactions, the company receives money from the sale, minus associated costs.
Secondary market: Investors trade existing shares with one another through exchanges and other trading venues. The company generally does not receive money when these existing shares change hands. Most everyday stock-market activity occurs in the secondary market.
Although a company does not receive proceeds from routine secondary-market trades, its share price can still affect employee compensation, acquisition financing, investor confidence, and its ability to raise capital in the future. A higher share price can be useful to a company, but it does not guarantee operational or financial success.
Every trade also reflects different circumstances and opinions. The person selling may have a different valuation, time horizon, financial need, or view of the company than the person buying. For beginners, the important lesson is to conduct research, understand the risks, and periodically reassess an investment as the company’s results and underlying facts change.
This article is for general informational and educational purposes only. It is not intended as financial advice, investment guidance, or a recommendation to buy or sell any security. The content reflects publicly available information and broad market commentary. Readers should conduct their own research and consult a licensed financial professional before making investment decisions.
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