The exchanges are used to trade stocks and is termed as a place where seller and buyer meets and decide their selling and buying prices.
Broadly exchanges can be divide and defined on two criteria’s – Physical & virtual. In physical exchange, the buyers and sellers use a physical location say a trading area/floor and trades their only.
Whereas a virtual exchange is a interconnected network of computers and trading process takes place electronically. The main objective of the stock market is to act as an intermediate or facilitator for buying/selling of securities between buyers & sellers and to minimize the risk of investment & returns during trading.
Here, we would like to differentiate between the primary market & secondary market as well. The term primary market is related to a market where the securities are created by IPO launching process of an organization whereas the secondary market which we call as stock market in general user’s term is a market involving the selling and buying of the trades.
It is to be noted that trading of a company's stock does not directly involve that company. The sellers and buyers are only involved during the process.