While you buy through a broker and from a seller, the transaction typically happens on a , such as the New York Stock Exchange (NYSE) or the Nasdaq . The exchange acts as a regulated marketplace that ensures the trade is fair, the price is transparent, and the ownership of the shares is legally transferred to you.
These firms provide personalized investment advice and wealth management in addition to executing trades, though they typically charge higher fees. 2. The Counterparty: Who is selling?
In the modern financial system, individual investors cannot walk onto a stock exchange floor and buy shares directly. Instead, you buy stocks through a (often called a "broker"). These entities act as the middleman, providing the platform and legal infrastructure to execute your trades.
Just as you are buying, another person somewhere else may be selling their shares of that same company at that exact moment.
When your broker executes your "buy" order, they find a to match it. This seller is known as the counterparty . Depending on the market conditions, the seller is usually one of the following:
