The stock market is a mechanism where investors buy and sell shares of publicly owned companies. A share represents partial ownership of a company and its profits. As a stock gains value, the owner receives dividends and its price rises. Stocks are traded on exchanges like the NYSE and Nasdaq. People looking to buy a stock match up with those wanting to sell and brokers facilitate the trade. Share prices rise and fall based on supply and demand, as well as new information about the company that could impact its profit potential (or make it less attractive to investors).
The price of a stock can also be affected by other factors. For example, a company that gets into trouble with customers or a scandal at the office may see its shares lose value. Or, a company that is growing faster than expected might see its stock price increase.
The stock market operates continuously throughout the day. Orders are submitted electronically from anywhere in the world or placed at a trading floor in person. When a trade takes place, the two numbers that are important to keep in mind are the Ask and Bid price. The Ask is the lowest amount a seller is willing to accept for their stock and the Bid is the highest price a buyer is willing to pay. If the Ask is significantly higher than the Bid, no trade will occur. In this case, the broker might use their own money or stocks to bridge the difference and close the trade.