Stocks: Exchanges & Markets

Thanks to technological advances, the standard notion of a stock market has changed tremendously in recent years. But whether it's housed in a pricey chunk of real estate in lower Manhattan or the vapors of cyberspace, the function of a stock market is always the same: It's the place where buyers and sellers meet to trade stocks.

The two main types of stock markets are exchanges and electronic markets.

Exchanges, such as the New York Stock Exchange and the American Stock Exchange, are physical locations where stock transactions are conducted auction style -- meaning traders try to find the best price. On the New York Stock Exchange, also known as the NYSE or the Big Board, firms give their buy and sell orders to their floor brokers. The floor brokers will either conduct the transaction by themselves by finding an interested party at the appropriate trading post on the exchange floor, or turn the order over to a specialist, who is essentially a broker's broker, finding a party to facilitate a transaction. On any given day, close to 2 billion shares may change hands on the NYSE, which has been around since 1789 and lists close to 2,800 companies' stocks. ...