Stock Market and How Stocks Are Negotiated

Stock markets are sensible to changes such as boosting and dwarfing of interest rates, political situations, events ahead of time, and those situations that one would never think could affect the economy or markets. In addition, the same stock markets have been constantly fluctuating due that they also have to adapt to any external situation.

To get to understand those changes, and how markets work may allow you to lower transaction costs when selling or buying stocks.

The stock markets: The stock markets are the foundation of any capitalist system where titles-valuables (stocks, bonds, options, future and services) are negotiated. The stock markets in the United States have two big interchanges and a parallel market (OTC.)

The New York Exchange (NYSE) and the American Stock Exchange (AMEX) are the largest in interchange and have negotiation environs in places in which there are stocks exchange.

The NASDAQ market is the same as that of the OTC, basically negotiates new stocks coming from low capitalization companies through phone and computer net chains. The stock markets and bonds have changed significantly due to technological advances. The wide and extent use of PCs and more specifically of the internet has given investors direct access to information that before would have been almost impossible to get.. Besides negotiation schedules for investors has been broaden. While before the markets gave access to negotiations during specific schedules, today negotiations are taking place out of schedule. Interchanges still close at the end of the negotiations official day (4:30 pm Eastern US time); after hours negotiations happen via the Electronic Computer Chain Network (ECN) which starts at 4:30 pm and ends at 9:30 am (Eastern US time), time in which the markets starts operating.

NYSE negotiations are taken place by floor specialists through sound voice auctions, but the NYSE is oriented towards the use automatic systems of wide use to accept sales and buy orders as done by its opponent, NASDAQ.

One of the many advantages that internet gives investors is that they can negotiate valuables through the line without the help of an stock market agent. Another advantage of the internet is the transparence in the market price. In other words, you can see the real price which buyers and sellers are willing to bargain over determined stocks. The bond markets still have a long way to go concerning transparence that their market prices should have for their potential buyers.

The transaction cost have dropped in the use of decimals. This change has had the effect of narrowing the lowest offer and ask for an extension of 1/16 points ($0.06) to a minimum of $0.01 per stock.

Coming of computers, on-line negotiations, ample negotiation schedules and the use of decimals have turned investing in different stocks something easier, but you also need to be better informed about the valuables you are going to buy or sell so easily. The stock market’s function is to provide continuous fair prices. Buying and selling financial valuables are auction procedures. A buyer offers a buying price (the amount he or she is willing to pay) and the sellers give their selling price (the price he or she is willing to sell at.) If these prices are similar the supply and demand coming from other buyers will be brought about until they complete the negotiation.

Efficient markets