You’ve probably heard people say, “the market is up” or “stocks are down.” But what does that really mean? In simple words, the stock market is a place where people buy and sell tiny pieces of companies, called shares. In this guide, you’ll learn what the stock market is, how it works, and why it matters. 

What Is the Stock Market?

The stock market is a network of marketplaces where investors trade ownership shares of public companies. These marketplaces include both traditional stock exchanges and electronic trading platforms. A stock (or share) represents a single unit of ownership in a company. When you buy a share, you own a small piece of that business and gain rights to a portion of its profits (known as dividends) and, often, the right to vote at shareholder meetings. Buying stock allows you to participate in a company’s growth over time. If the business performs well, its share price and your investment value may increase.

Analogy: Imagine your friend opens a bakery and offers you a share in exchange for investment. You now own part of that bakery — when it grows and profits, so does your share’s value. The stock market functions like that, but on a global scale.

Primary vs. Secondary Markets

When a company first issues shares to raise money from the public, it happens in the primary market through an Initial Public Offering (IPO). Afterward, investors buy and sell those shares among themselves on the secondary market, which is what we usually call the stock market. The primary market helps companies raise funds for growth, while the secondary market gives investors liquidity — the ability to easily buy or sell shares when they choose.This constant exchange of ownership keeps the market active and dynamic.

How Does the Stock Market Work?

At its heart, the stock market runs on supply and demand. The price of a stock at any given moment depends on what buyers are willing to pay and what sellers are willing to accept. If more investors want to buy a stock than sell it, demand pushes the price up. If more people want to sell than buy, the price drops. Factors like company earnings, investor confidence, and economic conditions all influence these shifts. In simple terms, stock prices rise when a company is popular and fall when confidence fades. Prices also reflect investor expectations means the market is constantly balancing optimism and caution.

Who Makes the Market Work?

Investors

These are individuals and institutions that buy and sell shares. Some invest long-term for dividends and growth, while others trade short-term price movements. Both groups keep markets liquid and efficient.

Brokers

A broker connects you to the market. You can’t trade directly on an exchange — your broker executes orders on your behalf. Many modern brokers or investing apps charge little or no commission, making access easier than ever. 

Exchanges

Exchanges are the regulated platforms where all trades occur. They provide transparency, publish prices in real time, and ensure there are enough buyers and sellers so trades can always happen. The NYSE and Nasdaq handle millions of transactions each day.

Regulators

Regulators protect investors and maintain fair markets. In the U.S., the Securities and Exchange Commission (SEC) enforces rules requiring companies to disclose financial information and prevent fraud. Other examples include the Financial Conduct Authority (FCA) in the UK and the Securities Commission Malaysia (SC) in Malaysia. Globally, organizations like the International Organization of Securities Commissions (IOSCO) set shared principles for investor protection and market integrity.

What Is a Stock Exchange?

A stock exchange is a structured marketplace that facilitates the buying and selling of company shares.

Examples include:

• New York Stock Exchange (NYSE) – the world’s largest exchange by market value.
• Nasdaq – home to technology leaders like Apple and Google.
• Bursa Malaysia – a leading ASEAN exchange offering both conventional and Shariah-compliant listings.

Each exchange ensures trades follow strict standards and that companies meet listing and disclosure requirements.

How Trades Happen 

Most trading occurs through organized stock exchanges such as the New York Stock Exchange (NYSE), Nasdaq, London Stock Exchange, or Bursa Malaysia.

Here’s how a typical trade works:

1. You (the investor) decide to buy 10 shares of a company.
2. Your broker or the investing platform you use sends your order to a market exchange.
3. The exchange finds someone willing to sell those same 10 shares.
4. The system matches your buy order with their sell order; the trade executes.
5. You now own the shares, and the seller receives your payment.

This process happens in fractions of a second because brokers route orders electronically to ensure you get the best available price.

What Makes Stock Prices Move?

Stock prices fluctuate constantly due to:

• Company performance – strong results attract buyers.
• Market sentiment – optimism fuels rallies; fear sparks sell-offs.
• Economic data – inflation, interest rates, and employment reports affect valuations.
• Global events – political shifts, natural disasters, or major announcements can move markets.

These factors influence supply and demand — and therefore price.

Analogy: Think of stock prices like concert tickets. When demand surges, prices climb; when interest fades, prices drop.

Why Do Companies Sell Shares?

Companies issue shares to raise capital for growth — whether to fund new products, expand into new markets, or reduce debt. Instead of borrowing (and paying interest), they sell ownership stakes to investors who share in future profits. This arrangement benefits both sides: companies gain funds to grow, and investors gain a potential return if the company succeeds.

How Orders Work 

When placing an order, you generally choose between:

• Market order: Executes immediately at the best available price.
• Limit order: Executes only at your chosen price or better.

Understanding order types helps investors manage risk and control trade execution.

Why the Stock Market Matters

The stock market is vital because it connects businesses seeking funding with investors seeking growth.

• Companies raise money to create jobs and innovate.
• Investors can build wealth by supporting these companies.
• Economies thrive as this cycle of investment drives development.

Healthy, well-regulated markets — such as those overseen by the SEC or IOSCO — help efficiently channel capital into productive enterprises, fueling long-term prosperity.

Conclusion

The stock market isn’t a mysterious casino — it’s a living system where ownership changes hands and opportunities are created every day. When you buy a stock, you’re not just trading numbers on a screen; you’re becoming a small partner in a real business.  At Hyssa, we believe investing isn’t just about profit — it’s about purpose: growing your wealth in a way that honors your faith, supports real businesses, and builds a future you can be proud of. Once you understand how the stock market works, you can begin your investing journey with clarity, confidence, and conscience.