Stock trading as a phrase, has often been taken literally by the people that haven’t gone deeper into the subject to understand it better. You actually cannot trade stocks, and the term “trading” in the financial jargon is used to describe buying or selling of the stocks.

When it comes to stock trading, you don’t have to know most of the technical details on how to sell or buy stocks, however having a basic understanding on how a market works, has its importance. Here is, in short, an explanation about the market’s technical side:

Exchange floors vs. Electronic markets

There are a couple of basic ways exchanges can execute a stock trade. The first way of stock trading is done on the exchange floor and the second is done electronically.
There is a very strong current, which is pushing stock trading off the exchange floors with a desire to do it through the networks. However, there is some resistance when it comes to this and exchange floors are still commonly used when it comes to trading stocks.

Most of you probably imagine the stock exchange floors and how a market works as presented in the movies or on the TV. It is quite true that the stock market is a chaotic place with many people rushing in and out, talking on the phones, working with the data on the terminals and constantly having their eyes on the monitors. However, when the day ends the markets have all of the trades worked out and are ready to start the next working day.

How The Actual Stock Trading Works?

First, you need to find a good broker and tell him to buy an amount of shares of a certain company which are available on the market. His order department will then send the order to their clerk located on the exchange floor. Then, the clerk will alert one of the company’s floor traders who is willing to sell the amount of stocks required. The two of them then agree on a price and are ready to have the deal completed. The whole notification process goes back the same line and in the end of the process you will have your broker calling you back with the final price deal. The whole process will take a couple of minutes, maybe even longer, all depending on the stocks and the market. You will receive the confirmation notice via email within just a few days.

This was just an example of a simple stock trade. However, when there are more complex trades with a larger amount of stocks involved, there are more details in the overall process as well.

The electronic markets are a bit different than the regular ones since they use computer networks rather than a real broker. These networks also work well and have a purpose to match a buyer with an adequate seller.

If you are getting into the stock trading and the market, the choice on how to do it will be according to your needs and desires.