Stock market trading is also known as equity trading. It is the process of buying and selling of company stocks or shares through stock exchanges. A stock market is a market where securities like company stock and derivatives of company stock are traded. These securities are listed on a stock exchange. Online stock trading refers to the trading of stocks and derivatives away from the stock markets or stock exchanges through internet. This is done through computer terminals located at the online stock trading company's offices or somewhere else.
The stock market can be categorized into two parts:
- The Primary Market: The primary market deals with offering of new issues (Initial Public Offers or IPOs).
- The Secondary Market: The secondary market deals with subsequent trading of the shares after the IPO is made.
An investor can do online stock trading on his own, but he has the option to authorize an online stock trading company or agency to do the trading on his behalf. The company or agency will charge a brokerage or commission fee for doing that.
The virtual stock exchanges implement the methods of online stock trading. This kind of a stock exchange comprises of a computer network. The process of online stock trading is carried out electronically with the help of traders at their computer terminals.
In case of virtual stock exchanges, the buyers and sellers are matched electronically.
Examples of virtual stock exchanges are the NASDAQ and the Paris Bourse.
The leading online stock trading companies include the following:
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