Located in New York City, the New York Stock Exchange (NYSE), one of the largest stock exchanges in the world allows stock to be easily bought and sold. There are over 3,200 companies listed on the NYSE. Anyone, through a broker, is able to buy and sell stock efficiently between each other through the NYSE.

Up until January 2007, stocks were bought and sold on the floor of the NYSE. Now, the Hybrid Market has allowed stocks to be easily bought and sold electronically. The NYSE is efficiently run and set up specifically. All stock brokers must know where to go when they are ready to trade stock.

In order to trade on the floor, stock brokers must hold one of the 1,366 seats available. These seats are bought and sold similar to stocks. The price goes up and down just like stocks do and are generally very expensive.

When you watch the news during the financial segment, they often tell you how the Dow or the S&P 500 is doing. These are both Stock Market Indexes. The Dow is short for Dow Jones Industrial Average. It includes 30 large companies.

The value of the Dow is computed using a price-weighted average. This is done by adding up all the prices of each of the 30 stocks and then dividing it by 30. This keeps a proportionate number among each of the stocks. The Dow is looked at as a portfolio holding one share of each stock each at the same price (after the price-weighted computation).

The S&P 500 is short for Standard & Poor’s Composite 500. This index is better than the Dow because it includes 500 stocks and is a market value-weighted index. This means that the value is calculated based on the market value of the shares outstanding. For example, if one stock has stock outstanding at twice the value of another, it is weighted twice as much.

Financial experts use Market Value Indexes to rate the overall progress of the stock market. For example, they will compare the value of the S&P 500 last month to this month to see if it went up or down. The Dow is used as well the same way, as are other indexes.

The NYSE and market indexes have been around for a while and work well. Understanding the basics behind these instruments and understanding how to use the information they give can help you become a better investor. Use them wisely.

Related posts:

1. What is the New York Stock Exchange?
2. The Difference Between the Forex Exchange Market and Stock Market?
3. Stock Market Trading – Where Does It Occur?
4. Basics of Stock Market Investment
5. Secrets of Online Trading and Stock Market Hours

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