The next step down from this global network, called the stock market, is where these securities are traded. A stock exchange is important to provide a place for fair and orderly trading, while giving correct price information for all the securities being traded within that exchange. Stock exchanges in their early years were always physical locations, it wasn't until 1971 when the NASDAQ exchange became the world's first electronic stock market. As technology enhances, more and more trading is being conducted electronically without requiring all parties to be present on the exchange floor. To be included on the stock exchange as a company you must adhere to the many regulations and requirements.
Notable Stock Exchanges:
New York Stock Exchange (NYSE) - The world's largest stock exchange
Euronext - A European electronic stock exchange based in Amsterdam, Netherlands
NASDAQ - The world's second largest stock exchange, also based in New York City, NY
Tokyo Stock Exchange - The world's third largest stock exchange
There are approximately 112 stock exchanges that exist in the world today and a based in many different countries.
Next, I will give a better understanding of what exactly is being traded in the stock exchanges worldwide. A stock (also known as "share" or "equity") is a type of security that represents a claim on a small part of a specific corporation's assets and earnings that can be owned by an individual through the stock market. Stocks are divided into two main types: common and preferred stock. A common stock usually signifies that the owner is granted a single vote for each stock owned at a shareholder' meeting and is to receive dividends. In a preferred stock, you usually don't have voting rights, but you have a better chance at claiming dividends than a common stock. Both types still insist that the individual owns a piece of that corporation. Historically, stocks have had larger capital gains than most other investments available.
The process of buying stock is not as simple as most might think, this is due to the complex system and the regulatory policies set in place. In some cases, companies offer individuals direct stock purchase plans (DSPPs) that provide an investment plan directly by the company. This structure would call for a monthly investment in return for stock in their company. Without such plans an individual would have to use a broker to conduct their purchase of a stock. Many investors now used what's called an online discount broker, this is a company that allows individuals to setup an account online and pay a fee for the purchase of stocks. This way of investing in stocks has become much more popular due to the considerably higher fees charged by a full service broker. I do advise that you do the proper research and educate yourself before any purchases of stock are made.
