How the stock market works

The stock market is a network of exchanges, brokerages, market makers, and data providers that help investors transfer ownership of public company shares.

What a share represents

A share is a small ownership unit in a public company. Companies can raise money by offering shares to the public, and shareholders can later trade those shares with other market participants. Share ownership can come with rights such as voting on certain corporate matters or receiving dividends when a company declares them.

What trades on the stock market

The securities listed on stock exchanges are largely made up of two types: individual company stocks and exchange-traded funds, commonly abbreviated as ETFs. Both trade under ticker symbols during the same sessions, and both report prices, volume, and other market data the same way.

• Stocks represent ownership in a single company, so their recorded price reflects market activity for that one business.
• ETFs are funds that hold a basket of underlying assets and issue shares in that basket, so their recorded price reflects the combined activity of everything the fund holds.

What an ETF is

An ETF is an investment fund whose shares are listed and traded on an exchange. The fund holds a portfolio of underlying assets, which can include stocks, bonds, commodities, or a mix of asset types. Buying one ETF share gives the holder a proportional interest in that entire portfolio rather than in any single company.

Most ETFs are designed to track an index, a sector, a region, or another defined set of holdings, and the fund publishes the list of what it holds. Because ETF shares trade on an exchange, their price changes throughout the session as trades occur, which can differ slightly from the combined value of the underlying holdings at that moment.

• Net asset value is the per-share value of the fund's underlying holdings, usually calculated once per day.
• Expense ratio is the annual percentage of fund assets charged to cover the fund's operating costs.
• Holdings are the underlying assets the fund owns, often weighted by an index methodology.
• Distributions are payments a fund may pass through to shareholders from dividends or interest its holdings generate.

TickStock treats ETF symbols as stock market symbols, so the same historical price data, charts, watchlists, and alerts are available for them.

Primary and secondary markets

The primary market is where a company first sells shares to raise capital, such as during an initial public offering. After that, most trading occurs in the secondary market, where investors exchange already issued shares with each other through brokers and exchanges.

How exchanges match orders

Exchanges organize buy and sell orders for listed securities. A trade occurs when an order to buy can be matched with an order to sell at a compatible price. The most recent matched trade becomes part of the historical price record shown by market data services.

• Market orders request execution at the best available price when the order reaches the market.
• Limit orders specify a maximum purchase price or minimum sale price for a trade.
• Bid usually refers to the highest displayed price a buyer is currently offering.
• Ask usually refers to the lowest displayed price a seller is currently offering.

Why prices move

Stock prices change as new trades occur. Historical price movement can reflect many factors, including company announcements, earnings reports, economic data, interest rates, sector news, broad market conditions, available liquidity, and the balance of orders at different prices.

A price chart shows what happened over a selected time period. It should be treated as a record of past market activity, not a prediction of future price movement.

Market hours and data timing

Many stock exchanges have regular trading sessions on business days, with limited pre-market and after-hours sessions available through some brokers. Prices, volumes, and quotes can differ between sessions because fewer participants may be active outside regular hours.

Market data may also vary by source. Some feeds are real time, while others are delayed or adjusted after corporate actions such as stock splits and dividends.

Extended-hours trading

Extended-hours trading refers to the pre-market and after-hours sessions that take place outside the regular session. On the major United States exchanges, the sessions are commonly described as follows, in Eastern time.

• Pre-market runs from 4:00 a.m. to 9:30 a.m., though many brokers open access later, often at 7:00 a.m. or 8:00 a.m.
• Regular session runs from 9:30 a.m. to 4:00 p.m. on business days the exchanges are open.
• After-hours runs from 4:00 p.m. to 8:00 p.m.

Availability, session times, and eligible symbols vary by broker and venue, and exchanges publish shortened schedules around some holidays.

Extended-hours orders are matched on electronic communication networks rather than through the full exchange auction process. Many brokers accept only limit orders during these sessions, and orders that do not execute may expire when the session ends rather than carrying into the next session.

Recorded market activity during extended hours commonly differs from the regular session in several ways.

• Volume is usually far lower, because fewer participants are active and many institutional orders are routed during regular hours.
• Spreads between the bid and the ask are often wider, reflecting thinner displayed liquidity at each price.
• Price movement can be larger between individual trades, since a single order can represent a greater share of the session's activity.
• News timing matters more, because earnings reports and other company announcements are frequently released outside regular hours.
• Reference prices such as the official open and close are taken from the regular session, so extended-hours trades are usually reported separately.

Because of these differences, an extended-hours price may not match the price recorded when the next regular session begins.

Common stock data fields

• Open is the first recorded trade price for a trading session.
• High and low are the highest and lowest recorded trade prices over the selected period.
• Close is the final recorded trade price for a trading session.
• Volume is the number of shares traded over the selected period.
• Market capitalization is commonly calculated as share price multiplied by shares outstanding.

How TickStock uses stock market data

TickStock helps you review historical prices, charts, company details, watchlists, and alerts you configure. The information is presented in a neutral format so you can understand market activity without receiving a recommendation or forecast.

For guidance about whether a financial decision is appropriate for your circumstances, consult a registered investment advisor.