beginner
8 min read

How the Stock Market Works

Understand exchanges, order types, market hours, and what drives stock prices. Essential knowledge for every investor.

What Is the Stock Market?

The stock market is where buyers and sellers trade shares of publicly traded companies. Major U.S. exchanges include the NYSE (New York Stock Exchange) and NASDAQ. When you buy a stock, you're buying from another investor (or market maker), not directly from the company.

What Drives Stock Prices?

  • Supply and demand: More buyers than sellers pushes prices up; more sellers than buyers pushes prices down.
  • Company performance: Earnings, growth, and outlook influence demand.
  • Economic conditions: Interest rates, inflation, and GDP growth affect investor sentiment.
  • News and events: Product launches, regulations, and geopolitical events can move prices.

Market Hours

U.S. markets are open Monday–Friday, 9:30 AM–4:00 PM Eastern. Pre-market (4–9:30 AM) and after-hours (4–8 PM) trading is available on some platforms but has lower liquidity.

Order Types

  • Market order: Buy or sell immediately at the current price.
  • Limit order: Execute only when the price reaches your specified level.
  • Stop-loss: Triggers a sell order if the price falls to a certain level.

For long-term investors, market orders during regular hours are typically sufficient.

Frequently Asked Questions

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How the Stock Market Works | Investors Lab | Investors Lab