The stock market is the place where people trade shares, or small pieces of ownership in publicly traded companies. This trading happens on stock exchanges, and there are dozens around the world. The prices of individual stocks move up and down based on many different things, from investor optimism about future profits to interest rates to news about companies.
There are a few key steps to getting started in the stock market: You can open a brokerage account with a licensed broker, either on your own (as a self-directed investor) or through an investment advisor who will make trades for you. Once you have an account, you will need to decide whether or not you want to invest in individual stocks, mutual funds and/or ETFs (exchange-traded funds).
If you’re thinking about investing in individual stocks, one of the best things to do is to diversify your portfolio. That means buying shares of a variety of different companies across multiple industries. That way, if one company’s shares drop in value, it won’t affect your entire portfolio as much.
The first modern stock exchanges arose in Europe in the 1600s, allowing people to trade their shares in companies like the Amsterdam Bourse and the London Stock Exchange. This was a huge change from the early days of investing, when people gave away their own money to fund a business venture, and the profits and liabilities for losses stayed with them. Today, the stock market has become central to global economies, with its moves often reflecting the health of a broader society.