Glossary
Stock Exchange
The venue where shares change hands, with rules about who may trade there, prices everyone can see, and a fixed schedule.
The New York Stock Exchange and Nasdaq are the two large US ones. Only members trade on an exchange directly, which is why an ordinary order goes to a broker first. The broker is a member, or routes the order to one, and the order reaches the exchange through it rather than from the person who placed it.
What an exchange provides is a place where orders meet and a price everybody can see at the same time. Being listed on one also comes with obligations for the company, including filing with the SEC on a schedule and meeting the exchange's own standards for size and reporting, which is part of what separates a listed company from a private one.
Not everything trades on an exchange. Orders can also be matched by a market maker or on other venues, and where an order actually executes is settled by the broker's routing rather than by the person who placed it. The price prints publicly wherever it happens, which is why the last traded price is one number rather than several.
Learn this properly
Lesson 3: How Buying a Stock Actually WorksBrokerage accounts, what happens in the seconds after you press the button, and order types explained without the jargon.
Related terms
- StockA share of ownership in a company, which makes the holder a part-owner of the business rather than a lender to it.
- Market HoursThe regular session when US exchanges are open: 9:30am to 4:00pm Eastern, Monday to Friday, minus market holidays.
- Ticker SymbolThe short code that identifies a security on an exchange, such as AAPL for Apple or MSFT for Microsoft.
- LiquidityHow easily something can be turned into cash near its quoted price, without the act of transacting moving that price.
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