Money makes the World Go Round

Find out more about the financial side of The City of London…

What is the Stock Exchange?

It’s one of the world’s oldest stock exchanges and can trace its history back to the coffeehouses of 17th century London where merchants would meet to buy and sell things.

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How do stocks and shares work?

Imagine you are a very successful baker. You might be thinking about opening another shop.

But shops are expensive and you might not have quite enough money to set it up.

You could get a loan from a bank, but that will need to be paid back.

Learn more about loans…

What you could do is sell some of your company to pay for the expansion.

Firstly, you need to decide whether to sell just a few hundred shares or thousands of them.

Then, you must decide whether to sell to just one person or to lots and lots of different people.

That will give you the money to buy your new shop

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What is a Stock Broker?

These traders buy and sell shares in all sorts of different companies.

They try to buy them when they are cheap and sell them when they are worth more.

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How do you trade stocks and shares?

For years, trading was done in something called a trading pit with traders shouting to each other and using hand signals to buy and sell stocks and shares–and that could be anything from coffee and flour… to gold.

So being a stock broker means keeping your eye on share prices and also what businesses are doing, and selling when the price is right

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So how does the Stock Exchange work?

For many decades, the London Stock Exchange provided a trading floor where stock brokers and traders would meet to buy and sell shares.

And then in 1986, the market was deregulated in what became known as the ‘Big Bang’ and computerised trading replacing the old pit-style trading floor.

Today, share trading is almost entirely electronic and the London Stock Exchange processes over a million trades per day using state-of-the-art systems.

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