The stock market is a network where economic transactions occur. The world’s largest stock exchange, the NYSE, has a market capitalization of over $30 trillion. Aside from several crashes, the only major disruptions to the NYSE were WWI when the exchange closed for two months and a bombing outside the building in 1920 which killed 33 people.
Technological innovation has had a huge impact on how stock markets operate. Just a few decades ago, in order to make a trade a person had to call their broker who would then have to call their representative on the exchange floor. This was very expensive and time consuming. Now, thanks to the internet and personal computers, people can sign up for accounts with discount brokers and can trade for themselves. Most people have heard of the expensive discount brokers such as ETRADE and TD Ameritrade, both of whom charge $10 per trade plus fees. Brokers such as TradeKing cost half as much and can even provide better services. Others like Interactive Brokers will charge from $.01 to $.001 per share traded but will not walk you through the process like the more expensive brokers do.
Average people now have the ability to bypass a traditional broker and can make instant trades. This is making it slightly more difficult for Wall Street to profit off of the investing public. Some people even make a living day trading from their home, competing directly with Wall Street. Online tools such as NYSE OpenBook allow people to see in real-time the exchange’s limit-order book. This is the tool that the big Wall Street firms use to a see where supply and demand imbalances are and to predict where prices will move.