What is the Stock Market? NYSE, NASDAQ, BIST in 5 Minutes
The stock market is an organized exchange where buyers and sellers of shares meet. NYSE, NASDAQ, and BIST explained from scratch with how stock prices form.
Quick answer: The stock market is an organized electronic marketplace where buyers and sellers of company shares meet. In the US, the main exchanges are NYSE and NASDAQ; in Turkey, Borsa Istanbul (BIST). Stock prices change second by second based on supply and demand. To buy a share you need a brokerage account; you place an order, the broker routes it to the exchange, and when buyer matches seller, the trade executes.
Table of contents
- What is the stock market?
- NYSE vs NASDAQ
- How is a stock price determined?
- Brokers and placing an order
- What is an index? S&P 500 and NASDAQ-100
- FAQ
- What to do now
What is the stock market?
The phrase “stock market” gets used loosely in everyday speech (“the market crashed”, “the market is hot”). The technical definition is precise: the stock market is an organized, regulated, electronic platform where buyers and sellers of company shares meet to trade.
The practical mechanic: Apple shareholder Ahmad in California wants to sell. Sarah in New Jersey wants to buy Apple shares. The two don’t know each other and never will. The exchange (NASDAQ) matches them. Ahmad enters a sell price of $200, Sarah enters a buy price of $200, NASDAQ pairs them, and the trade settles in milliseconds.
This matching happens at sub-second speed. NASDAQ alone processes more than $5 billion in daily trading volume.1
“The stock market is a device for transferring money from the impatient to the patient.” — Warren Buffett
The market itself isn’t a company; it’s a marketplace. NASDAQ doesn’t own Apple shares. NASDAQ just organizes the trading. The owner of any Apple share is whoever bought it.
NYSE vs NASDAQ
Two main US exchanges. People often confuse them.
NYSE (New York Stock Exchange):
- Founded 1792, the oldest major exchange in the world.
- 2,400+ listed companies (Berkshire Hathaway, JPMorgan, Coca-Cola, Walmart).
- Traditionally the home of established, large-cap companies.
- Total market cap ~$30 trillion.
NASDAQ (National Association of Securities Dealers Automated Quotations):
- Founded 1971, the world’s first fully electronic exchange.
- 3,500+ listed companies (Apple, Microsoft, Amazon, Google, Meta, Tesla, NVIDIA).
- Technology-heavy, growth-focused.
- Total market cap ~$25 trillion.
| Feature | NYSE | NASDAQ |
|---|---|---|
| Founded | 1792 | 1971 |
| Typical listing | Established industry | Tech, growth |
| Trading mechanism | Hybrid (specialist + electronic) | Fully electronic |
| Listing requirements | Higher (revenue, profitability) | More flexible (growth-stage) |
| Typical example | Coca-Cola (KO) | Apple (AAPL) |
A US stock is listed on one or the other, never both. Apple is only on NASDAQ; Coca-Cola is only on NYSE.
How is a stock price determined?
A stock price isn’t fixed. It moves second by second. The logic is supply and demand.
The mechanic: In any given second, 1,000 people want to buy a stock and 1,000 want to sell. Their bid prices (highest a buyer will pay) and ask prices (lowest a seller will accept) differ. The exchange auto-matches the highest bid with the lowest ask. The price at which they match becomes the “market price” for that second.
Example (AAPL on a fast-moving day):
| Time | Buyers | Sellers | New price |
|---|---|---|---|
| 10:00:00 | 1,200 | 800 | $200.50 (more buyers, price rose) |
| 10:00:01 | 800 | 1,500 | $199.80 (more sellers, price dropped) |
The price isn’t set by you, by me, or by any single institution. It’s the collective decision of all participants.
Long-term, what moves price?
- Company earnings growth
- Sector dynamics (how peers are doing)
- Macro economy (interest rates, inflation, growth)
- Investor sentiment (fear, greed)
Short-term, sentiment dominates. Long-term, earnings dominate. Which is why long-term investing typically beats short-term trading on after-fees, after-tax basis.
Brokers and placing an order
You can’t buy directly from the exchange. You need a broker. In the US, dozens of SEC-regulated brokers. The broker does four things:
- Opens your account (SSN, ID verification, suitability questions).
- You fund the account → cash sits in the brokerage.
- You place an order (buy/sell) → broker routes to the exchange.
- When the trade executes, shares appear in your account.
Common US brokers (commission-free for stocks):
- Robinhood — popular with younger investors, simple UI.
- Fidelity — established, full-service.
- Charles Schwab — established, full-service.
- E*TRADE — long history, options-friendly.
- Vanguard — index fund focus, known for low-cost ETFs.
- Webull — modern, paper trading included.
Order types:
- Market order: “buy/sell at the best available price right now” (fastest, but price can surprise you).
- Limit order: “buy at no more than $200” / “sell at no less than $205” (price control, but may not execute).
- Stop order: “sell if price falls to $190” (loss limitation).
Beginners are safest with limit orders. You control the price, no surprise.
What is an index? S&P 500 and NASDAQ-100
An index is a weighted average of a specific set of stocks, used to measure overall market performance. Tracking every stock individually is impossible; the index answers “how’s the market doing?” with a single number.
S&P 500: The 500 largest US public companies. Apple, Microsoft, NVIDIA, JPMorgan included. Long-run nominal return ~10.5% annually (USD), real ~7.5%.
NASDAQ-100: The 100 largest non-financial NASDAQ companies. Tech-heavy.
Dow Jones Industrial Average (DJIA): The 30 largest US companies. Historically symbolic but small-sample, less used for serious analysis.
Russell 2000: The 2,000 smallest publicly traded US companies. Used to gauge small-cap performance.
Buying an index fund (ETF) means investing simultaneously in all stocks in the index in proportion. SPY (S&P 500), QQQ (NASDAQ-100), VTI (total US market). Index funds are the most common passive-investing tool.
FAQ
What’s the difference between NYSE and NASDAQ?
Both are organized US stock exchanges, but with different listed companies. NASDAQ is more tech-heavy and fully electronic. NYSE is more traditional industries with a hybrid (specialist + electronic) trading mechanism. Apple lists on NASDAQ; Coca-Cola on NYSE.
How much money do I need to start buying stocks?
Most modern brokers have $0 account minimums. The minimum to buy is one share’s price. If AAPL is $200, you can start with ~$200 (commission-free at most major brokers).
Does the stock price change when the market is closed?
No active trading happens after-hours, so the price stays at the close until next-day open. However, news (earnings reports, geopolitical events) released after-hours often causes a “gap” up or down at the next open.
What happens to my shares if my broker goes bankrupt?
Your shares are held in your name (or street name) at a custodian. SIPC protection covers up to $500,000 in securities and $250,000 in cash per account. In practice, brokerage failures are rare and shares move to a new broker.
Is the stock market gambling?
Not if you don’t trade randomly. For an informed long-term investor, the market is a way to participate in economic growth. The S&P 500 has historically delivered positive real returns over long periods. Random short-term trading is closer to gambling.
How do I buy international stocks (like a Turkish stock from the US)?
Some brokers (Interactive Brokers, Schwab International) offer access to foreign markets. Or you can buy ADRs (American Depositary Receipts) — US-listed wrappers around foreign stocks. Currency risk (USD vs target currency) becomes a factor.
What’s the minimum age to start investing?
Brokerage accounts in the US generally require age 18+. For minors, custodial accounts (UTMA/UGMA) let parents invest on the child’s behalf. Paper trading (UseFinLit and others) has no age requirement and is a great way to start learning earlier.
Practice This in UseFinLit (1 minute)
Above we explained how exchanges work. UseFinLit Module 1 / Lesson 11 walks you through the same in 60 seconds with an animation of buyer-seller matching, then a mini quiz, then your first paper-portfolio look-up of a real stock at live prices.
UseFinLit: 1-minute lessons, 100K paper-trading, AI feedback on every trade. 32 modules, 600+ lessons, NYSE, NASDAQ, and Borsa Istanbul live data.
Educational only. Not financial advice.
Read Next
- What is a Stock?: definition of what trades on the market
- What is the P/E Ratio?: figuring out if a stock is cheap or expensive
- Best Investing Apps for Total Beginners: which broker should you start with
- Learn Investing for $0: free resources
- What’s Your Risk Profile?: know yourself before you invest
Author: Daniel R., Markets Editor, UseFinLit. Former retail brokerage analyst.
Published: June 5, 2026 · Last updated: June 5, 2026
References
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NASDAQ Daily Trading Volume Statistics, 2024 average. ↩
