The stock exchange has long provided individuals with the opportunity to purchase shares of some of the world’s major companies and today, the market is rife with opportunity. In the modern day. the most popular way to engage in stock trading is on an online trading platform, where you can speculate on the value of some of the world’s most successful businesses. However, this wasn’t always the case, and the stock market has come a long way in order to reach the point at which it’s at today.
It is believed that the first individual investors emerged back in the 14th century in Venice, where early “broker” type workers would carry thin slabs of slate with the day’s newest information of debts for sale, pioneering the trading of securities from other governments. This was just the beginning. In this article, we will provide you with a brief history of the stock exchange, exploring how the market and trade of stocks has evolved over the years.
The first stock exchange is born
Experts believe that the first example of a stock exchange emerged in Belgium and can be traced back as far as 1531. Antwerp became the hub for international trade and goods would be bought by investors on the exchange, anticipating that rising prices would enable them to generate a profit. Though this concept emulates the stock exchange that we’re familiar with today, the market dealt only in bonds and promissory notes, meaning there were no stocks to trade in the 16th century.
Stock trading beings
It wasn’t until 1611 in Amsterdam that the modern concept of stock trading began to surface. This was in response to the emergence of the first publicly traded company — the Dutch East India Company. As the only business that held this status, the only trading activity that took place in the market was the exchange of shares of this company.
Following the rise of the Dutch East India Company, other countries began to follow, forming companies that could be bought and sold on the exchange. Investors were so excited by the idea of having multiple stocks to buy and sell that they bought shares of organisations without researching them. A period of financial instability ensued and in 1720, the market crashed as a result of investors attempting to sell their shares too quickly.
The US stock market
Today, the United States are leaders of the stock market and The New York Stock Exchange (NYSE) accounts for 40% of the total global stock market value. However, the US didn’t become involved in stocks until the late 18th century. The American stock exchange first began with a group of merchants who formed the Buttonwood Tree Agreement and met on a daily basis to purchase and sell stocks and bonds. It was at this point that what we know as the New York Stock Exchange began to take shape.
The NYSE resided on Wall Street, the hub of all US business and trade and the home of the majority of the country’s banks and major corporations. This location was rife with opportunity and the NYSE quickly grew to become the most prominent stock exchange in the world and didn’t experience any serious competition for the next two hundred years.
New exchanges emerge
In 1801, London formed an exchange and this became Europe’s major stock market, though the majority of countries still turned to the NYSE to list internationally. This sparked a trend and the likes of France, the Netherlands, Germany, South Africa and Australia began their own exchanges, however the US remained the home of the world’s most trusted stock market.
The Nasdaq was created by the National Association of Securities Dealers (NASD), transforming the way that investors can enter and trade in the stock market. Rather than being a brick-and-mortar exchange, the Nasdaq inhabited a digital space, being a network of computers that enabled trades to be made electronically. This made it easier for individuals to invest in the market, reducing the bid-ask spread and forced the NYSE to modernize.
The stock market has long been one of the most actively traded markets, since it enables investors to own a minute portion of a company and profit from its price movements. You could easily invest in some of the world’s most exciting stocks today on an online trading platform, where you can find everything you need to know to start trading online. You’ll need to research the market, specific stocks and understand fundamental and technical indicators before you open a position, to avoid making significant losses. To help you further, you could even open a demo account and practice trading without risking your own capital.
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