Welcome to my First Year Trading Educational Series. Here, I’m taking trading all the way back to the basics and keeping things as simple as humanly possible. Because that’s how I believe trading should be kept.
For the rest of the lessons in the series, click here.
Today we’re taking it all the way back to basics, folks. Back to a time long, long ago. Back to the beginning.
Because this year I am going to dedicate myself to create a series of posts that will take beginning, first year traders all the way through the process of learning how to trade.
I’ve always wanted to do this, but haven’t be able to find the time. But with some key site design elements out of the way, that space has finally opened up for me.
So I’m going to ask myself, if this was my first year trading, what do I wish I would have learned, and then I’m going to pass this along to you, fellow retail trader.
So let’s take it all the way back to the start and answer this very simple question:
What is “The Stock Market”?
After doing a quick search on the internet, I came across the following definition for the stock market and I think it works fine:
A stock market or equity market is the aggregation of buyers and sellers of stocks; these are securities listed on a stock exchange as well as those only traded privately.
We’ll focus on what stocks actually are in the next lesson (I told you I was going back to basics) so for right now, let’s just focus on the “market” part of the stock market definition. The dictionary defines a market as…
An open place or a covered building where buyers and sellers convene for the sale of goods.
And that’s exactly the way I like to think of it. Only, instead of buying and selling “goods”, we are buying and selling interest in a publicly traded company.
For example, let’s say that tomorrow morning you decide that you want to buy shares in Google ($GOOG) — you will quite literally (albeit electronically) be going to market.
This is no different from rummaging through a Saturday morning flea market to find items that hold value for you.
If you’ve ever been to one of these flea markets then you’re aware of how the process goes. You see something you like, you haggle the price and then pounce once you believe you and the seller have arrived at a happy medium.
So the stock market is a place (physical or electronic) where buyers and sellers go to haggle over the price of stocks and to trade them to each other. Sounds good to me.
So How Old is The Stock Market, Anyway?
So how old is the stock market, and where did it come from.
Well, according to Wikipedia:
In 12th century France the courretiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. Because these men also traded with debts, they could be called the first brokers.
In the middle of the 13th century, Venetian bankers began to trade in government securities. Bankers in Pisa, Verona, Genoa and Florence also began trading in government securities during the 14th century. Companies in England and the Low Countries followed in the 16th century.
The Dutch East India Company (founded in 1602) was the first joint-stock company to get a fixed capital stock and as a result, continuous trade in company stock occurred on the Amsterdam Exchange.
So, as you can see, the markets have been around for a long time.
And you, fellow retail trader are about to become part of that tradition.
Where is the Oldest US Stock Market Located?
So where is the oldest stock market in the US located? I always thought it was the New York Stock Exchange. Well, I was wrong.
In the US specifically, the oldest stock exchange is the Philadelphia Stock Exchange.
Once again, Wikipedia has us covered:
Philadelphia Stock Exchange (PHLX), now known as NASDAQ OMX PHLX, is the oldest stock exchange in the United States, founded in 1790. It is now owned by NASDAQ OMX and located at 1900 Market Street, in Center City Philadelphia.
Did I know this before I started this blog post? No! I did not.
But how cool is it that we can take part in this historic activity and make money doing it?
Stay tuned for more, fellow retail traders!