If you ever look at business news or business shows on television, you would no doubt hear such words or phrases as "stock market," "stocks," "trading," or "stock market trading." What are such things, and why are they important? To answer such questions, here is an overview of exactly what stock market trading means.

Definition - What we call stock trading is really stock buying and selling, and stocks represent shares of ownership in corporations. Corporations make public offerings of stock in order to raise capital to grow their business. The stocks are traded just as any other commodity would be traded. The place where the trading takes place is called the stock exchange, and it can be a real place such as a trading floor, or a virtual place that exists online.

How Stocks are Traded - The stock market is called an auction market and involves buyers and sellers. A specialist on the trading floor matches bid prices with offer prices until he finds a match and a trade takes place. You have seen on TV the representatives of brokers on the trading floor raising their hands and crying out bids and offers. This is the age old traditional way of trading stocks, known as "open outcry", but there are more modern methods used now as well.

Key Players in Stock Trading - Stock trading participants vary from persons selling small individual stock investments to institutions trading collective investments, hedge funds, pension funds, mutual funds, etc. Big investors can be banks, insurance companies and other huge companies.

Importance of Stock Market Trading - Stock trading is required to foster economic growth. It does this by helping companies raise capital or by helping they handle their financial problems. Stock option strategy helps ensure that the capital is saved and is invested in most profitable business. Moreover, if you learn option trading it will help you a lot in stock trading.

Trading Stocks Online - The Internet has made it very convenient for us to do many things that we once had to do over the phone or in person. These things include but are not limited to shopping, conferencing, and communications and we can do these things anywhere we can log on. Now you can do the same with stock trading and this has opened up the market to a whole new set of investors. You can get real time valuations of your investments any time you want.

The Downside of Stock Market Trading - If you compare stock trading to other investment techniques you will find that it is really very limited in its flexibility. You can't leverage it for bigger gains the way you can with stock options and if you are betting on a down market you are better off selling put options than short selling stocks.