Tap buy on a US share in a trading app. The order may never reach a stock exchange, the official market where shares are listed and traded. In September 2026, 50.6% of all US shares traded changed hands away from the exchanges, according to data from Cboe Global Markets, an exchange operator.
The stock market is a network of places where buyers and sellers of shares meet. This guide follows one buy order from the app to the moment you own the share. It shows who sits on the other side of the trade and how each trade sets the price.
How does the stock market work? The stock market is the network of exchanges and other trading venues where investors buy and sell shares that already exist. Each trade happens at a price that a buyer and a seller both accept, which becomes the share's latest price.
A company raises money only when it sells new shares to investors. Once shares exist, investors trade them among themselves. The company receives nothing from those trades.
An order placed in a trading app can fill on an exchange or away from one, with a firm that sells from shares it already holds. In September 2026, 50.6% of US shares traded changed hands away from the exchanges.
A price rises when buyers take every share offered at the lowest asking price. The next trade then happens at a higher price. It falls when sellers fill every order at the highest bid.
A share is a slice of ownership in a company, as we explain in What Is a Stock? Shares are sold in two kinds of market. In the primary market, a company sells new shares to investors and receives the money. The best-known case is an initial public offering (IPO), when a company first sells its shares to the public.
In the secondary market, investors buy and sell shares that already exist. The company is not part of those trades. This guide covers the secondary market.
Where stocks are traded: exchanges and off-exchange venues
A stock exchange is a market where securities, such as shares and bonds, are bought and sold. The US Securities and Exchange Commission (SEC), the US markets regulator, lists 29 registered national securities exchanges. Some of them trade only options, which are contracts to buy or sell at a set price later. Most exchanges belong to groups that run several each. By shares traded in September 2026, the two largest groups belong to the New York Stock Exchange (NYSE) and Nasdaq.
Trades can also happen away from an exchange. A market maker, a firm that stands ready to buy or sell a share at the prices it quotes, can fill an order from shares it already holds. Another option is an alternative trading system. The SEC describes it as a trading system that works like an exchange but is not registered as one. Firms report these off-exchange trades to the Financial Industry Regulatory Authority (FINRA), the US industry regulator for securities firms.
Source: Cboe Global Markets; YX Insights
Chart 1 adds up every US share traded on the 21 trading days of September 2026. That came to about 357 billion shares, or about 17 billion a day. Off-exchange trades made up 50.6%. The NYSE, Nasdaq and Cboe exchange groups took 42.7% between them. The Investors Exchange (IEX) and five smaller exchanges took the rest. For 2025 as a whole, the off-exchange share was also 50.6%, according to Cboe.
How a buy order travels from the app to settlement
Source: SEC (Investor.gov); YX Insights
Chart 2 shows the five steps. The SEC describes the first three in its guide to executing an order.
You place the order. A market order buys at the prices sellers are asking when it arrives. It fills fast, but the price is not fixed in advance. A limit order sets the highest price you will pay, so it may not fill.
The app's firm chooses where to send it. It can go to an exchange, to a market maker or to an alternative trading system. The firm can also sell to you from shares it already holds. The SEC says the firm has a duty to seek the best execution reasonably available.
The trade fills. Your order meets a seller at a price you both accept. The SEC notes that this is not instant.
Clearing. A clearing house records both sides of the trade and prepares the instructions to settle it. For US shares, that is the National Securities Clearing Corporation (NSCC).
Settlement. The shares move to the buyer and the cash to the seller. Since 28 May 2024, US share trades settle one business day after the trade, according to the SEC. This is known as T+1. A share bought on Monday settles on Tuesday.
Who is on the other side of your trade
Every purchase needs a seller. It is one of three:
Another investor whose sell order was already waiting on an exchange.
A market maker, which quotes a price to buy and a price to sell at the same time. We explain how it earns money in What Does a Market Maker Do?
The firm behind your app, selling from shares it already holds. The SEC calls this internalisation.
An exchange keeps an order book for each share, listing the orders waiting to trade. The bid is the highest price a buyer will pay. The ask is the lowest price a seller will accept. The gap between the two is the spread.
Source: YX Insights
Chart 3 is an illustrative order book for a made-up share called ABC. The best bid is $49.99 and the best ask is $50.01. So the spread is 2 cents.
A market order to buy 300 shares first takes all 200 shares offered at $50.01. It then takes 100 of the 400 shares offered at $50.02. The order costs $15,004, an average of $50.013 a share. The last trade was at $50.02, so ABC's price is now $50.02. The best ask has also moved up a cent.
This is how prices move. When buyers keep taking the asks, the price climbs one level at a time. When sellers keep accepting the bids, it falls. The price is the record of the latest trade.
What can go wrong with an order
The price moves before the order fills. The SEC warns that by the time an order reaches the market, the price can be slightly or very different.
A big market order climbs the book. In Chart 3, a market order for 1,200 shares would clear all three asks. Its last 600 shares would cost $50.03 each.
A limit order may never fill. It protects the price you pay, but the market can move away from your limit.
Practical notes before you buy
Check the bid and the ask. Buying then selling straight away costs the spread.
Know the hours. US shares trade from 9:30am to 4pm New York time, according to the NYSE. That is 14:30 to 21:00 in the UK for most of the year.
Read an index as many share prices at once. An index tracks a basket of shares as one number. The S&P 500 tracks 500 large US companies. Bigger companies, measured by market value, count for more. We explain it in What Is the S&P 500?
Expect daily swings. We look at what drove the biggest falling days since 2016 in Why Is the Stock Market Down Today?
Summary: how the stock market works
The stock market is a network of venues where existing shares change hands. Your order travels from the app to an exchange or to a firm that trades away from one. The price you pay is the price at which a buyer and a seller agreed.
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DISCLAIMER: This article is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.