You own a part of a company when you buy a stock. The stock is the smallest share of the company. Companies to raise capital sell a segment of their company by issuing a stock. The share holder holds the stock with the right to say his opinion about how a company runs and shares the profits. The sock holder does not face responsibility if the company faces a court case. The investor has to face only that their stock will have no worth and they will lose their investments. There is boundary to issue the number of shares. The stocks are allocated a par value when they are issued by the company.

If a company wants to expand their business in some way, they will usually sell stocks to gain the capital. Depending on how successful a company is will set the price of the stock.

If a company is successful, it's stock price will rise. Companies that have been thriving for a while will have high valued stock. These investments will be safer but may yield small returns. A newer company, because they do not have long proven success, will have cheaper stock. If the company succeeds, their stock may sky rocket in value. On the other hand, the company may fail completely and you will loose your investment.

The National Association of Securities Dealers Automated Quotation System and the New York Stock Exchange are the stock trading places. Those companies who are on this public exchange system can sell their shares on the open market. An investor can choose a small company to purchase which is not on the stock exchange. Those purchases and buying stocks are totally dissimilar purchasing methods.

Stocks are sold and bought in the stock exchange so an investor should have a stock broker to make all the transactions. Brokers take the instructions from the client to buy or sell certain stocks. The investor can grant the broker to trade the stock when it hits a particular price or whatever the stock market can get. The broker tries to find a suitable buyer, or seller to fulfill the investors instruction. The brokers have links with the other brokers who correspond to a different buyer or seller. Every broker will fulfill the instruction of their investor to get commission for the sale.