Trading Stocks

Stock Exchange

• A physical or virtual market for trading shares, bonds, warrants, etc.

• Stock exchange organizations represented by stock brokers (sell and buy stock on behalf of their customers)

Listing Stocks

• Companies list shares based on listing requirements of the particular stock exchange.

• In the United States, stocks can be listed and exchanged on electronic communication networks due to the inter-market quotation system.

Buying on Margin

• One way of financing stock is buying stock on margin.

• One buys stock with borrowed money

• The stocks are collateral for the loan

• Interest is charged on the borrowed money

Selling

• Like buying, selling a stock requires a broker’s transaction fee

• After the stock is sold, the seller receives all money

Technology and Trading

• Use of Computer-Mediated Communication (CMC)

Examples: laptop computers, cell phones

• Technological advances make day trading possible.