Learn about the stock market and how it works.
- What the market does
- How stock prices are determined
- How to get started buying and selling
Interested in the stock market? It can be a powerful tool to help you reach your financial goals, and can be easier to understand than it may seem. But if you’re feeling intimidated, overwhelmed, or in the dark when it comes to the stock market, don’t worry – you’re not alone in this.
In Canada, this part of the financial world isn’t common knowledge. Less than half of Canadians own stocks – approximately 39% – and participation isn’t everything. Sometimes people who own stocks don’t have a full understanding of the market. Another study found that, among Canadians who do invest, only one third actually know how investing works.
What is the stock market?
If you’re unsure of what a stock really is we recommend reading this Stock 101 guide first but if you’re already familiar with them feel free to dive right in.
Stock market is the term used in reference to all stock exchanges – where investors come together to buy and sell shares of companies from each other.
In the past, the stock market only operated physically at stock exchanges, where people met in-person to buy and sell. Today, these stock exchanges largely operate online as a digital space that allows buyers and sellers to get the same job done.
Globally there are over 60 major stock exchanges. The largest one as of August 2021, is the New York Stock Exchange (NYSE).
How it works
So, let’s say you want to buy a stock. How does it actually happen? The answer: stock brokers.
The stock market works by having licensed stock brokers trade shares on a stock exchange for buyers and sellers.
Some brokers are still real human beings who work in-person at an exchange, but they are a rarity. Today, most of what brokers do is completed electronically. Platforms like Questrade are an example of this.
Even though much of the brokering is done electronically nowadays, traditional trading hours apply to many stock markets.
For example, in Canada the Toronto Stock Exchange (TSX) is open for trading Monday to Friday, from 9:30 am to 4 pm ET, except for stock market holidays which are announced ahead of time.
