How does the stock market actually work?

At its simplest, the stock market is a collection of exchanges where shares of public companies are bought and sold [1, 3]. Here is how the process works:

• The Exchanges: Companies partner with a stock exchange to offer shares of their business to the public [3]. These exchanges provide the structured environment where trading takes place [3].
• Buying and Selling: Institutional and individual investors trade these shares with one another [1]. When you buy a stock, you are purchasing a piece of ownership in that company [1, 3].
• Price Movement: Prices in the market move based on a variety of factors related to how investors perceive the value and future prospects of those companies [1].

In essence, the stock market functions as a marketplace that facilitates the exchange of ownership between those who want to sell shares and those who want to buy them [1, 2].