The stock market is a set of economic relations regarding the issue and circulation of securities between its participants.
Now the stock market exists as part of different exchanges. Each country can have its own exchange, on which stocks of national companies, as well as foreign ones, can be traded.
The exchange is the place where the seller and the buyer meet, and the commodity is a security.
Ordinary people cannot directly trade on the stock exchange, because this is a rather complex technical process. People can trade on the stock exchange through an intermediary - a broker or a dealer. Most often in Russia, people use the services of brokers rather than dealers.
A broker is a professional participant in the securities market, performing intermediary functions between the seller and the buyer on the stock exchange.
A dealer is a professional participant in the securities market who makes transactions on his own behalf at his own expense. Also on the exchange market there is an individual or a legal entity (most often it is a legal entity) - Market Maker. This company maintains the liquidity of any security during the trading period, it is not difficult to see a market maker in the order of exchange, it puts the same volumes of securities to buy and sell with a slight difference in price. It is important to understand that in an unstable situation on the market (strong price fluctuations), the market maker leaves the market and does not maintain it is liquidity.
How it works?
For example, Augustine wants to buy 20 stocks of Apple (NASDAQ:AAPL), she creates an order to the broker, which indicates the following information: you need to buy 20 stocks of Apple at a price of $ 200 per 1 stock. If there is a seller who wants to sell 20 stocks at a price of $ 200 per 1 stock, then the transaction will be made and securities will be credited to the buyer account.
In the order for the broker, you need specifics, how many securities, at what price, what if there is not the right number of securities at the right price, and so on.
What if Augustine turned to a dealer? In this case, the transaction would look like this: Diller buys back securities in his own name, and then sells these securities to Augustine