Development of modern stock markets

A purpose-built building for making deals, the exchange (later the largest European stock exchange) first appeared in 1531 in the Flemish city of Antwerp. In its image were created Lyon Stock Exchange (1545), Royal London Stock Exchange (1566) and other exchanges, which were mainly commodity exchanges. Their difference from wholesale trading was not only an opportunity to buy or sell goods without bringing the entire batch to the place of transaction, but also the fact that at the exchange one could conclude a transaction for the delivery of goods, which could not be produced yet. Appearance of transactions with delayed execution date provided an opportunity to derive profit from price fluctuations, which made the exchange a resort for speculators. From this moment on, anyone, who understood that preservation of capital was its multiplication, became interested in the exchange, and the only instrument of enrichment was one's own intellect and perspicacious mind.

Securities market

At that time, participation in trading on exchanges was available only to owners of large capitals. After all, not everyone could find the money to buy 10,000 sacks of grain or a caravan of oriental spices. In order to solve this problem effectively, exchanges began to emerge. stock exchanges. Stock exchanges needed to be mass-produced, although they were not always publicly available.

Even great wealth was not stable, because its owner sought to invest all the money in the enterprise to get the biggest profit, and the lack of reserve made even a rich man a victim of changing circumstances (price increases, failure to fulfill obligations to a partner, the destruction of a ship with goods, etc.) That is when it became necessary to turn to small contributors, whose small capital in total provided a significant addition to the "central" capital. Therefore stocks were issued, giving each holder the right to take part in the company's business and receiving a share of profits, depending on the amount of investment. appeared. securities marketwhere anyone could buy stocks of a company that he trusted or stocks that were simply going up in price. This is how stock exchanges emerged, where they no longer traded commodities, but paper obligations.

Since the late Middle Ages, the state apparatus of any European country has spent more money than it has collected taxes. Almost always the royal treasury had a negative balance. The state was forced to issue "debt securities," promising high interest. The popularity of such securities only strengthened the role of stock exchanges in the economic life of the state. And the population gradually became accustomed to financial discipline, financial prudence and financial control over the state.

Thus, producers need funds for production all the time, and the state has a time lag between collecting taxes and spending these funds. In contrast, the population accumulates substantial sums of money in the form of savings. The state issues bondsIn the first case, the owner of the bond will receive a guaranteed interest, and in the second case, a portion of the company's annual profits in the form of dividends. In the first case, the owner of the bond will receive a guaranteed interest, and in the second - a portion of the company's annual profits in the form of dividends. Stock Exchange acts as a trade organizer for such securities.

The stock exchange is a child of time

Inheriting the tools of trade from the commodity exchange, stock exchange The stock market quickly overtook it. The mass transition to the joint-stock form of all business, which began in the second half of the 19th century, secured its primacy status in the exchange world. From this moment, the stock exchange began to play one of the main roles in the economic growth of countries.

Further development of stock exchanges The exchanges of the most economically developed countries gradually came to the fore. Gradually, exchanges of the most economically developed countries came to the fore. The shares of the companies, which have raised the scale of their financial operations to the national ones, were fixed on them. With consolidation of stock exchanges, the exchange mechanism started to change. Initially, being a place of meeting of two merchants, who wanted to conclude a transaction, the exchange did not fulfill any functions, except for providing conditions for conclusion of the transaction.

With the growing number of trades, the stock exchange was physically unable to accommodate all those who wanted to sell or buy goods or securities. Whoever undertook the function of exchange transactions became an intermediary. In a separate exchange transaction three parties were already involved: the seller, the buyer and the intermediary. At the initial stages the model is simple - one intermediary brings together the seller and the buyer. With the growth of stock transactions, the model becomes more complex: there are two intermediaries. The buyer goes to one, and the seller goes to another, and the probability of coincidence is small.

With the even greater intensity of stock transactions, a model popular as far back as the 19th century is emerging: now the intermediaries themselves need help, and another one appears between them. Let's call it "central", and its counteragents - "flank" intermediaries. In the XX century, the exchange became so popular that, for example, in the U.S. more than 50% of the population take part in trading. Stock Exchange already has a very extensive and well-developed network of application services, where it is very easy to make a deal with a small capital, though still expensive because of the many intermediaries.

The Age of Technical Analysis

Fierce competition and the development of Internet technology have greatly simplified the technical and legal side of transactions. The computer revolution has been followed by the stock market revolution.

The central information link is also dispersed here. Participants enter into transactions with a greater degree of independence, crossing borders of countries, economic unions and formerly solid exchanges. It is no longer necessary to stand for hours among enfilades of the exchange hall, fawn on the common clerk, get a huge number of permits and trade blindly, when the investor, giving orders to his broker, used at best the bulletins of NEW YORK WALL STREET JOURNAL, and at worst - just rumors. The Internet, healthy competition, new technology and science have changed everything. The market is even more self-adjusting, overcoming the selfish interests of the big stock market players. The aggregate mass participant in this affordable virtual exchange is becoming stronger than any of the financial sharks who in the past could have caused a crisis in a single country or even on a continent. The combined intellect of the multimillion-strong mass of stockholders now ensures the well-being of the middle, intellectually active class.

Approximately in the 50-60's of the XX century, at the beginning, enthusiasts, and then the rest of the progressive part of the exchange community paid attention to the fact that the price of this or that financial asset does not change chaotically, but is subject to certain regularities. Practically everywhere traders began to mark prices on coordinate axis and try to analyze obtained diagrams. Thus came the New Era in stock trading - The Age of Technical Analysis.

Support and Resistance

Technical analysis assumes that all information about the market and its further fluctuations is already contained in the price. Any factor influencing the price - economic, political or psychological - has already been taken into account by the market and included in the price. Background data for technical analysis are exchange prices - highest and lowest price, opening and closing price for a certain period and volume of operations. The instrument of technical analysis is a chart; the language is statistics. It can be said that technical analysis - is a statistical-mathematical analysis of previous quotations with prediction of subsequent prices.

This approach to stock trading was new and attractive. In just a few years, technical analysis has evolved from an "exotic tool" to a scientific method. Now it is probably impossible to imagine the stock exchange without price change charts, like technical analysis without lines Support и Resistance.

The profession of a financial asset manager or simply a trader has become more than a simple craft. Trading results largely began to depend on the ability to correctly interpret events, and not just on the financial potential of a participant of exchange trading. Such qualities as individuality, analytical mind, quick reaction, etc. started to play a great role.

Margin Trading

The next stage in the evolution of the Stock Exchange was the introduction of margin tradingThe CFD (Contracts for Difference) exchanges are particularly bright, futures contracts and (Forex). The essence of margin trading consists in granting a loan for a speculative transaction in an amount several times higher than the client's funds. The ratio of the loan amount to the client's collateral funds is called Leverage. Currently, this ratio can be 1:100 or more.

Thanks to this service, more and more of the world's financial markets have become available to the average investor. Presently, a holder of USD 5,000-10,000 will certainly not "turn over" the market, but will be able to do what previously was beyond the power of even millionaire companies. He can gain income irrespective of the market whims, collusion of transnational companies and stock collisions. The only thing trader cares about is analysis of market situation and forecasting of price changes by methods of technical and fundamental analysis. The forecast of price change is certainly a difficult task. But look closer at securities quotation charts, find regularities, read special literature, train yourself. And then the profit will be a worthy reward for the sharpness of your mind.

How much does a seat on the stock exchange cost?

The globalization of the capital market and the development of technology have led to a redefinition of the entire concept of the functioning and development of money and stock markets. It is safe to say that the money of private investors, whose mass influx was facilitated by advanced electronic technology and the general introduction of electronic trading, contributed to the unprecedented rise of the stock market in recent years, maintaining high liquidity and the flowering of investment activity.

On the other hand, despite obvious advantages of electronic trading - cheapness, simplicity, transparency and quickness of operations, transition to new technologies of securities trading required overcoming conservatism of large professional participants of the stock market. Old players, losing their business, are constantly fighting to prevent new ideas from entering the market. But progress is inexorable. And classical exchanges work on such a scheme, that if all inventions of mankind for the last 100 years disappear, and it would be possible to write only with goose-quills, they wouldn't stop their existence anyway. They have both a trading pit and traditional vocal bidding in the hall. For example, at New York Stock Exchange (NYSE) The number of exchange members has not changed since 1953 and amounts to 1,366. It is possible to become a member only by buying membership from another member, passing numerous checks on the nature of activity, creditworthiness, etc. After that, it is necessary to get the approval of the special Committee for admission of new members and the Exchange Council (Board of Directors). Usually it requires recommendations of existing Exchange members.

In August 1999, the price paid for one seat on the NYSE was 2,650,000 USD. And that was only for the right to participate in stock trading, not including taxes and fees!

IPO computer technology

The development of Internet technologies and Internet trading, as well as the processes of globalization of the world economy have clearly manifested themselves in the formation and growth of new electronic exchanges and the development of electronic trading in the stock market, and in other markets, too. An example is the largest electronic exchange in the world. NASDAQIt is the largest stock exchange with a centuries-old tradition, which in some 20 years surpasses all major exchanges by the volume of traded shares and by the number of initial public offerings (IPOs). Transactions are conducted only through computer networks, i.e. there are no trading halls. There are more than 200,000 terminals scattered around the world and it is possible to become a participant in electronic trading from almost anywhere in the world.

Competitive struggle in modern stock markets leads to:

- investing significant financial resources in the latest technology;
- the creation of new market instruments on their basis;
- to improve the quality of services;
- reducing transaction costs;
- establishing direct links between investors and issuers regardless of their nationality.

How can you characterize the modern stock market? Most importantly, the exchange has become extremely accessible. Anyone can now become a participant in electronic trading, even with a small deposit - from a few hundred dollars! The elimination of a huge number of intermediate links made the services much cheaper.

Commissions, spreads and other brokerage fees have become several times less, and as a consequence, more and more non-poor investors are coming to the exchange. Improvement of trading conditions (instant and precise execution of orders and impressive Leverage) led to the enormous popularity of electronic exchange trading. Naturally, a person with a small amount will have a small profit. But this profit, can be invested again, and make the next increase already significant.

Now we can say with certainty that there is no other way on the modern stock exchange than to enter into a single international electronic space, which gives everyone the opportunity to become a participant in the currency, commodity or stock market.