What’s a stock exchange? We hear the term thrown around loosely when reports reporters report that ‘the stock exchange was down today’ like there was just one equity market. Fact is, there are many stock exchanges in northern US and several in major centers thru Europe and Pacific Rim, including Frankfurt, London, Japan, and the Malaysian Stock Exchange.

The major indices in northAmerica include the Toronto Stock Exchange, CDNX, the Montreal Stock Exchange ( which recently revealed it was going to merge with the TSX ), Naz, AMEX and the grandaddy of all of them : the DJX. Used properly, the term stock exchange exactly describes what goes on inside each of these locations.

For the majority of northern US stock exchanges, they’re open between 9:30am – 4pm, Mon. to friday.

So what occurs at these exchanges? Like any market, there are bidders and sellers trying to haggle over the price of an item, in this case, shares in a publicly traded company. If the bidders are prepared to meet the sellers price, the share price moves higher, while the share price moves lower if the seller agrees to the buyers cost. Depending on the economy, company basics and recent reports, there might be more traders interested in buying or selling shares. Generally, if there is a downtrend in the economy, the markets experience a bear market, which means that even good news is generally discounted, and sellers generally win the day. In a bull market, bad news is discounted, and good news is sometimes exaggerated. Think of the dot com bubble back in the late 1990′s.

Financier psychology also performs a part in deciding the share price. Greediness and fear help to exaggerate share prices. While demand and supply for shares plays a part, there is nothing like old fashion fear of missing the likelihood of a lifetime to pump up the share price, or the fear of losing whatever capital is left after there was bad news to push the share price even lower.

These fluctuations create opportunities for smart investors.

buying and selling shares arenot the sole way to make money in the stock exchange. There are other sorts of markets including the currency market ( forex ), commodity market and the Options Market.

The commodity market deals with contracts to buy and sell products at mentioned prices and times. A farmer as an example, may want to trade futures primarily based on the future cost of corn. This enables him to lock in prices for future delivery. Naturally, this can and generally does change on a scheduled regular basis, depending on current events and weather patterns. Most future traders however trade the contract, not the physical products.

forex is by a large margin the larges investment market in the world today. In simple language forex trading permits a financier to buy currency against the other, providing a potential return for the trader. If you suspect that the US dollar will gain against the Eurodollar, you can buy US dollars and sell if the US dollar in fact gains. Its one of the riskier systems of investing. Although it can provide extraordinary returns, it can leave you in the poorhouse just as quick.

The Options market gives traders the right, but not the obligation to trade a stock for a certain price, before an agreed date. Most savvy traders will go long on a stock, but get a put option ( basically allowing the trader the right to go short on the same stock ). This supplies the necessary insurance incase the stock declines.

A smart financier knows the risks before they invest in the stock exchange. Whether penny stocks, massive caps or futures, they weigh the chance before making their move.

There is masses of money to be made in the exchange if you know what to search for. Its all about knowing the stock market basics first.