If you watch the news or read a newspaper, you’re sure to have heard of the stock market. You read that shares in Walmart showed a 2% gain, or the Dow Jones Industrial Average fell a whopping 400 points yesterday, but may you don’t understand what it’s all about. If so, then you’re like many of your fellow Americans. There’s nothing easy about understanding the workings of the stock market. However, if you take the time to learn what there is to know, you may just wind up making a lot of money in investments.

To start with, let’s pretend that you own a business. Although you’ve done quite well since you opened your doors three years back, you’re now in a position where you need to expand your facilities. In addition, you’ve come up with an idea for a great new product, and you need capital in order to have your idea developed and marketed. That’s the time when you might decide to sell shares of your business to investors in order to raise the cash you will need for your expansions.

The stock market is where you’ll sell your stock. In over-simplified terms, the stock market is nothing but a huge store where people will buy and sell shares in your business. The good thing about this “store” is that investors don’t have to visit New York in order to shop there. People have access to stockbrokers, the salespeople so to speak, both locally and online. This stockbroker will take an investor’s order and contact a person he employs to be his floor broker at the New York Stock Exchange (NYSE) or at another stock exchange. Here in the 21st century, more and more of the process is being handled by computers, though.

After receiving an order, the floor broker goes to the appropriate place in the stock market where he can place the order. He then reports back to the local broker that the deal has been made, and the investor now owns a small piece of the action in your business. The investor is now hoping that he’ll make a profit from investing in you. If your expanded business starts making a lot more money, the price of your shares will rise, and your investors will make a profit. If your new product idea bombs and you lose your shirt, the investor stands to lose his investment. That’s a gamble that investors take.

You may decide that you want to take advantage of possible stock market gains by purchasing stock in other companies yourself. Your transactions will work the same way. You’ve heard about a new business called “Apples, Apples” that has just started issuing stock. The concept they are selling sounds great to you, and you’re sure they’re going to make a lot of money. You want to cash in on the action, so you call your broker, or visit a brokerage online, to place your order. After that, you become part owner of the new business, and hopefully stock prices will reflect the faith you have placed in them.

If you’ve ever gotten to visit the trading floor at the NYSE, you know that the entire trading process is like operating inside of a three-ring circus – but with more than three rings. The stock market trading floor is as large as half of a football field. It is divided into 22 horseshoe-shaped trading posts, each of which has a large counter and about a dozen clerks working at it to process orders. During trading hours, the floor is a constant whirl of activity as over 2,000,000 trades are made each and every trading day.