Stock Trading in a Secondary Market

Stock trading in the secondary market is the most common type of stock trading in the world today. If you are going to get involved in the stock market, you need to have a basic understanding of how the secondary market works. Here are the basics of the secondary stock market and how you can trade on it.

Primary Versus Secondary

The primary market for stocks is when initial public offering occurs. A company that issues stock directly to investors is considered the primary market. In order to get involved in the primary market, you have to typically be a customer of the investment bank that offers the initial public offering. This limits the amount of people that can get involved. The secondary market is when investors sell the stocks to other investors. This makes it widely available to anyone that wants to purchase stock.

Secondary Market

Most stock investors are used to trading in the secondary stock market. If you buy or sell stock on the New York Stock Exchange or the NASDAQ, you are essentially trading in the secondary market. This means that you are buying the stock from another individual that owns it instead of the company that issued it. 

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