6 Characteristics of the Stock Market

by Kathryn Hatter

The stock market is an exchange or marketplace through which investors buy and sell stocks or securities. The overall goal for everyone involved in the stock market is to realize profit from trading securities. Six characteristics of the stock market might prove helpful for those people who are considering trading stocks.

Free Market

By definition, a free market is a marketplace whereby voluntary participation enables people to buy or sell goods or services. Because the stock market involves the supply and demand of securities -- investors buying or selling stocks -- it fits the definition of a free market.


The trading of securities is strictly regulated to ensure a safe and fair atmosphere for investors. The U.S. Securities and Exchange Commission regulates the stock market in the United States, setting policies and rules for trading and overseeing stockbroker activities to prevent insider trading.


Trading on the stock market once involved messengers running physically between offices to execute buy and sell orders. With current technology, data is delivered electronically, enabling investors to make buy or sell decisions immediately. A byproduct of the efficiency of technology is continuous fluctuations in stock market prices.


The full and complete disclosure of financial information keeps the stock market transparent. Investors have access to important data of publicly traded companies. Every investor has access to the same data. If agents or investors gain privileged information about a company or its planned business activities and use this information to buy or sell securities, this constitutes “insider trading” and meets with stiff penalties.

Immediate Liquidity

During business hours, agents or investors may buy or sell securities when they desire. Securities moving from one investor to another changes the landscape of the stock market and the specific statistics of the companies. Stocks have a measure of liquidity. High-volume trading is synonymous with high liquidity. Low-volume trading generally involves stocks with a liquidity discount.


Wild drops and surges of the stock market fuel investor excitement, angst or fear. The result often creates even more volatility, which creates more fluctuation. Technology also plays a role in stock market destabilization because trading occurs instantly and continuously throughout the trading day. A strong or weak economy also affects market stability because investors make decisions based on whether they anticipate a market upward trend or downward spiral.

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I am an avid writer able to research in a short amount of time and then write compelling articles based on this research. I have a short turn-around time and can be very prolific if needed.

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