The meaning of stock exchange defines a centralized platform where people can trade public shares established by private and public organizations. Stock exchange meaning is often mistaken by beginners who think that the term refers to any type of exchange. Well, it is not true, as the stock exchange is a location where you can buy and sell assets limited to only stocks.
In this article, we will try to figure out what is meant by stock exchange along with its major pros and cons as well as the way it differs from over-the-counter methods of trading different financial instruments and shares in particular.
While OTC methods involve trading assets directly between two parties involved, the stock exchange considers mediated trading, which means stricter requirements and regulations established for both speculators and investors.
What’s more, if a company wants to get listed on a stock exchange, it is supposed to meet various requirements. Which is quite a challenge. Some of them involve NASDAQ requirements, which means an organization should have at least $70 million market value to get listed. These requirements can be different depending on the exchange location. For instance, to get listed by Wall Street, the market value must exceed $100 million.
Investors or speculators may choose from multiple platforms located across the globe. They include major stock exchanges as well as smaller ones. The biggest share and stock marketplaces are located in:
Both companies that are listed and individuals seeking profitable trading opportunities can benefit from a stock exchange. At the same time, it might come with specific downsides that you also need to take into account.
The best way to overcome all potential cons and downsides is to implement effective risk-management strategies. What’s more, at least a prior understanding of stock exchanges or traded assets is needed. Learn how to trade stocks and get ready to enter the financial market with a solid background.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.