What is a stock exchange?
An exchange is an organized marketplace where eligible instruments trade under rules and oversight. A quoted price does not make an investment risk free.
How it works
1. Orders Buy and sell orders match under market rules. A limit price controls the acceptable price but not execution. 2. Markets Equities, debt and derivatives can have different trading and settlement rules. An index is a benchmark, not a portfolio automatically owned. 3. Price and volume Last price reflects a trade; volume measures activity. High volume does not predict direction. 4. Settlement Securities and cash transfer through clearing and settlement, sometimes after the trade date.
For investors
5. Intermediaries Investors typically trade through authorized brokers. Review fees, custody and order types. 6. Limits of oversight Disclosure and surveillance do not prevent price losses, issuer default or every abusive action. 7. Why prices move Earnings, rate expectations and global events change orders. One headline rarely explains every price move; long-term cash generation is distinct.