The stock market is the collective term for all exchanges where shares are bought and sold. It is the place where investors invest in companies and where companies can raise capital. Through the stock market, buyers and sellers trade with each other on a daily basis.

The stock market connects companies that need capital with investors who want to invest.

When a company issues shares, investors can buy them on the exchange. The price of those shares is determined by supply and demand. If many investors have confidence in the future of companies, prices often rise. During periods of uncertainty or economic headwinds, prices can fall. The stock market is not a physical location, but a network of digital trading platforms where millions of transactions take place every day. Worldwide, there are various stock markets, such as in Europe and the United States, which together shape global capital flows.

Short example:

Suppose a company sells shares for €20 each to raise money for expansion. Investors buy these shares through the stock market. One year later, the company is performing well and the price rises to €25. Other investors then buy and sell these shares again on the same market, with the price each time determined by supply and demand.

Disclaimer: Investing involves risks. Our analysts are not financial advisors. Always consult a professional advisor when making financial decisions. The information and tips provided on this website are based on the personal insights and experience of our analysts and are intended for educational purposes only.