Equities
Stock Market
The stock market is where shares in companies are bought and sold. This guide explains how stock prices are formed, where trading happens and how equities relate to the forex market.
Updated · FXPIPS Editorial Desk · Educational content, not investment advice
Data
Stock market data
Exchange prices are licensed, so we point you to the official sources instead of showing unlicensed numbers.
Drivers
What moves stock markets
01
Company earnings
Share prices reflect expectations of a company's future profits. Quarterly results and guidance that differ from expectations can move a stock sharply.
02
Interest rates
Higher interest rates raise borrowing costs and make future profits worth less in today's money, which can weigh on share valuations.
03
Economic growth
A growing economy tends to support company revenues and profits, while recession fears can reduce them.
04
Investor sentiment
Confidence, fear and changing appetite for risk can push prices away from what fundamentals alone might suggest, at least for a time.
05
Sector and industry news
Regulation, technology shifts and commodity prices can affect whole groups of companies at once.
What a stock is
A share (or stock) is a unit of ownership in a company. Shareholders may receive part of the company's profits as dividends and may benefit if the share price rises. If the company struggles, the share price can fall, and in a failure shareholders can lose their entire investment.
How prices are set
Stock prices are set by buyers and sellers on an exchange. Each listed share has a bid price (the highest price a buyer will currently pay) and an ask price (the lowest price a seller will accept). Trades happen when orders match. The last traded price is what you usually see quoted.
Unlike the forex market, which is mostly over-the-counter, most share trading in major markets happens on regulated exchanges and other trading venues with published order books and rules.
Major exchanges and trading hours
Each exchange has its own regular trading session in local time, often with pre-open and closing auctions.
| Exchange | Location | Regular session (local time) |
|---|---|---|
| New York Stock Exchange (NYSE) | New York | 09:30–16:00 |
| Nasdaq | New York | 09:30–16:00 |
| London Stock Exchange (LSE) | London | 08:00–16:30 |
Many venues also offer extended-hours trading, where liquidity is usually lower. Exchanges close on public holidays, which differ by country.
Stocks are priced in the currency of their listing, so a US share is quoted in dollars and a UK share is quoted in pence or pounds. If you buy a foreign stock, your return in your home currency also depends on the exchange rate. The Currency Converter can help with rough estimates.
Ways to gain exposure
- Buying shares directly through a broker, which gives you ownership.
- Funds and exchange-traded funds (ETFs), which hold many shares and spread company-specific risk.
- Derivatives such as CFDs, futures and options, which track prices without ownership and often involve leverage.
- Stock indices, which measure a group of shares; see our Indices page.
A simple illustration
Illustrative example: you buy 50 shares at $40.00, investing $2,000. If the price rises to $44.00, the position is worth $2,200, a gain of $200 (10%) before costs. If it falls to $36.00, the position is worth $1,800, a loss of $200.
With a leveraged product, the same price moves would produce the same money gain or loss on a smaller deposit, so the percentage change relative to your deposit would be much larger.
How stocks relate to forex
Equity markets and currencies often react to the same news: interest rate decisions, growth data and shifts in risk appetite. For example, when investors become more cautious, both stock markets and some higher-yielding currencies may fall together, while traditional safe-haven currencies may strengthen. These patterns are not fixed. Learn more in Fundamental analysis and Interest rates and currencies.
Risks
- Market risk: share prices can fall sharply, and a bear market can last a long time.
- Company risk: individual companies can fail.
- Currency risk for investments listed abroad.
- Leverage risk with CFDs and other derivatives.
- Gaps at the open after overnight news, because exchanges close each day.
All investing and trading involves risk, including the possible loss of your capital. This page is educational and does not recommend any security.
This page is for education only and is not a recommendation to buy or sell any instrument. Leveraged products such as CFDs and futures can lose you more than you expect; check your broker's contract specifications and your local regulations.