What is a stock market?

A stock market is a marketplace — a set of rules and systems where people buy and sell shares. A share is a small unit of ownership in a company, so owning a share means owning a tiny slice of that business.

Long ago, buying a share meant physically meeting a seller and agreeing a price. That is slow, and it is hard to know whether the price is fair. A stock market solves both problems by bringing many buyers and sellers to one organised place with shared rules.

What a market gives you

• Liquidity — you can usually find a buyer or seller quickly, instead of waiting for one.
• Price discovery — many competing bids and offers produce a single visible price at any moment.
• Standard rules — everyone follows the same contract, settlement and disclosure rules.
• Access to capital — companies can raise money from the public, and savers can put money to work.

Imagine a fictional company, Nimbus Technologies Ltd. Thousands of investors may want to own a small piece of it. In a market, a seller who wants cash can sell to one of those investors within seconds. Without a market, the same seller might wait months and accept a poor price.