Well we can say the concept behind how the stock market works is pretty simple. The stock market let’s buyers and sellers make trades through negotiation of prices.

The stock market works through a network of exchanges ,you may have heard of the New York Stock Exchange or may be the National Stock Exchange of India Limited (NSE) or the Nasdaq. Here the investors purchase those shares, which allows the company to raise money to help its business . Investors can then buy and sell these stocks among themselves, and the exchange tracks the supply and demand of each listed stock. Companies list shares of their stock on an exchange through a process called an initial public offering, or IPO.

The levels at which stock market participants , investors and traders really are willing to buy or sell can be determined by the supply and demand of the price for each security.

Generally buyers offer a “bid,” or the highest amount that they are willing to pay, which is more or less usually lower than the amount sellers “ask” for in exchange. This difference is called the bid-ask spread. For a trade to occur, a buyer needs to increase his or her price or a seller needs to decrease his or hers.

This all may sound complicated whereas most of the price setting calculations are generally done by the computer algorithms . When buying stock, you’ll see the bid, ask, and bid-ask spread on your broker’s website, but in many cases, the difference will be pennies, and won’t be of much concern for long-term investors and beginn The levels at which stock market participants , investors and traders really are willing to buy or sell can be determined by the supply and demand of the price for each security.

Generally buyers offer a “bid,” or the highest amount that they are willing to pay, which is more or less usually lower than the amount sellers “ask” for in exchange. This difference is called the bid-ask spread. For a trade to occur, a buyer needs to increase his or her price or a seller needs to decrease his or hers.

This all may sound complicated whereas most of the price setting calculations are generally done by the computer algorithms . While buying stocks, you will see the bid, ask, and bid-ask spread on your broker’s website, but in many cases, the difference will be pennies, and won’t be of much concern for long-term investors and beginners.