Today, the New York and the American Stock Exchanges, have been joined by the NASDAQ, and hundreds of local and international Stock Exchanges, that all play a part in the national and global economy. Many stocks that were deemed not good enough for the NYSE, were traded outside on the curbs. This so called "curb trading," has now become the American Stock Exchange (AMEX). On October 19, 1987 the stock market plunged 508 points, or 22 percent of the total market value. It was the worst crash, since 1927 which signaled the Great Depression. What brought about this crash, why such a drop in such a little time? One major reason for the crash was fear. Fear of a correction. Fear of a drop. Fear of being to late to get out. The 1980s had brought large stock increases, people had been making fortunes on the huge surges in the stock market. People began to fear that the market wouldn't be able to go up forever, and eventually it would fall, and create what is called a correction. The fear began to accumulate around October 15th, when The Wall Street Journal published an article entitled, "Stocks May Face More than a Correction." The morning of 1987, began with a quick loss of around 150 points. Although, the market did rebound a little before noon, the landslide had begun, and the market was losing too fast to hold back. Many of the specialists, whose job it is to negotiate the trades between sellers and buyers, were going out of business, because the rules state that they must purchase stocks that cannot be sold. In the end, the market plunged, and after the closing bell rang in the NYSE, there was silence between the brokers. People were speechless, many broke.  The most basic order is the market order, where you just ask the broker to buy or sell your stocks at the best price he can get his hands on. Another type of order which takes more research and predicting on your part is a limit order. In a limit order, you tell the broker to trade only when the stock is at a certain price or better. A stop order is an order which can save you from extreme loss. In a stop order, you tell the broker to sell your shares if the stock drops too low, and you tell him the price not to let it drop below.
Why does the stock market go up and down? Theses fluctuations occur partly because companies make money, or lose money, but it is much more involved than that. A stock is only worth what someone will pay for it. Usually, if a company makes a lot of money, its value rises, because people are willing to pay more for a company's stock if the company is doing well. There are many other factors that affect the value of stocks. One example is interest rates, or the amount of money you have to pay a bank to loan money, or how much it has to pay you to keep your money in their bank. If interest rates are high, stock prices generally go down, because if people can make a decent amount of money, by keeping their money in banks, or buying bonds, they feel like they should not take the risk in the stock market.