Stock Averages and Brokers

Stock Averages and Brokers
Every day on the Stock market news we hear about the Dow Jones Industrial Average, and other averages like the S&P 500 or The Russell 2000. These are the broad market averages designed to tell you how companies traded on the stock market are doing in general. The Dow Jones Industrial Average is simply the average value of 30 large industrial stocks. Big companies like General Motors, Goodyear, IBM and Exxon are the companies that make up this index. The S&P 500 is the average value of 500 large companies. The Russel 2000 index averages the values of 2,000 smaller companies.

These averages tell you the general health of stock prices as a whole. If the economy is doing well,the prices of stocks as a whole tend to rise in what is referred to as a "bull market" but If it is doing poorly, prices as a group start to fall in what is called a "bear market". The averages reveal these tendencies of rising and falling prices of stock in the market as a whole.

There are three big stock exchanges in the United States:

NYSE - New York Stock Exchange
AMEX - American Stock Exchange
NASDAQ - National Association of Securities Dealers

Stock in a company that does not meet the requirements of an exchange to get listed are called Over The Counter (OTC)stocks and are sold over the counter as its name.

Stock broker:
If you want to buy or sell stock, you don't have to go to stock exchanges like NYSE or AMEX. You can just call an agent who is authorized to trade at the exchange generally called Stock broker in a firm who will deal on behalf of you.And in a return,You need to pay stock broker a commission (generally $10 to $100 per trade, depending on the broker).