In terms of market capitalization, the New York Stock Exchange is the largest stock market in the world. That's why it's also termed „the Big Board.“ Located at Broad and Wall Streets, it is called the „Sunshine Market“ because the public can always view its trading floor through gallery windows. CNBC and other financial television networks televise the busy floor each morning.

The NYSE lists more than 3,000 companies, representing in excess of 253 billion shares of stock, valued at over $11 trillion. These equities are referred to as „listed stocks“ and most have large market capitalizations. „Market cap“ is measured by an equity's number of shares outstanding (shares available to the public not held by corporate insiders) multiplied by the price of a single share of stock. For example, as of this writing, industry titan General Electric (OE) has 9,908 million s~ares outstanding. The price per share is approximately $50. So GE's market cap is a whopping $495,400,000,000!

You may have heard GE referred to as „the bluest of the blue chips.“ Trivia lovers take note: The term „blue chip,“ a moniker applied to the thirty stocks that make up the Dow Jones Industrial Average, comes from the game of poker. Of the chips used to represent dollar valuations, the blue chip has the highest value of all: $500.

Within the New York Stock Exchange, a number of major indices give us daily clues as to the inner workings of the market. The most famous, of course, is the one just mentioned, the Dow Jones Industrial Average.

The 105-year-old „Dow,“ as we call it in Street short-speak, started with twelve stocks and now consists of thirty reigning icons of American industry. Traditionally, only NYSE stocks were appointed to the Dow. In the last couple of years, however, Intel (INTC) and Microsoft (MSFT), two of the 800-pound tech gorillas that led the Nasdaq to dizzying heights in the late 1990s, were appointed to the index.

Other important indices within the NYSE are the Dow Jones Transportation Index, consisting of twenty leading transportation stocks, and the Dow Jones Utility Index, comprised of fifteen utility stocks.

The NYSE operates on a centralized auction system. Different „posts,“ each representing a different stock, pepper the floor of the exchange. At each post, a specialist (read „auctioneer“) conducts a two-way auction between buyers and sellers and provides a market for that. stock. Only one specialist represents each stock; for example, GE has only one specialist. Specialists, however, can represent more than one stock.

Where You Come In

Say you want to buy 100 shares of Citicorp, Inc. ©. Basically, your order can be filled one of three ways:

1. You call your broker or you place the order through your online broker. The broker sends your order to the floor of the NYSE. A floorbroker representing your broker takes your order to the post where Citicorp is traded and asks the Citicorp specialist for a market. The specialist announces the „size“ of the market, or the number of Citicorp shares offered for sale at the best price, and the number wanted to buy at that best price. Your order is filled, and your broker confirms the price to you.
2. You give your broker the order by phone or Internet, and he or she enters it onto a SuperDOT (designated order turnaround) machine, an electronic system that routes your order to the specialist. (SuperDOT handles about 80 percent of all orders entered on the NYSE.) The specialist fills it and shoots it back to the clerk. The clerk informs your broker of the „fill“ (the number of shares and the price at which your order was filled), and your broker informs you.
3. You execute the order yourself on your direct-access trading (DAT) software system. This zaps the order from you to the specialist, and you usually receive the fill information in less than a minute.

When we say the specialist announces the „market“ in Citicorp, an example would be „48.88×49, size 5,000×10,000“ (the „x“ meaning „by“). Translation: A buyer, or buyers, is waiting to buy a total of 5,000 shares of Citicorp and is willing to pay $48.95 per share. A seller, or sellers, currently offers (wants to sell) a total of 10,000 shares at $49 per share.

The price difference between the best (lowest) price you can purchase the stock for and ~e best (highest) price you will receive if you sell it is called the „spread.“ In the previous example, it would come to five cents per share. If stocks were people, NYSE stocks would bear the reputation of being haughty statesmen and dignitaries. Perhaps, because their specialists are charged with keeping „a fair and orderly market,“ listed stocks may have rapid price changes, but most tend to step up and down their price ranges in a mannerly fashion.

If you're new to the stock market, I recommend you target NYSE issues for your first trades. You'll be less prone to the eye-bugging, stomach-clutching attacks that can be brought on by Nasdaq high-flyers.