This is just something I've never fully grasped no matter how it's explained to me. It's a little embarrassing, but I just can't get it. I don't get it when I hear on the news, "The Dow is down ____." What do they mean, and how IN SIMPLE TERMS does the stock market work!?

A piece of ownership of a company is written down as a "share" and this "note" is exchanged like tangible goods on market such as Nasdaq. If the company seems to do well or will do well in the future everyone wants a piece of ownership and this creates demand which drives price of share up.

If you have 5 apples and someone will give you 8 bannas for them today and you take the offer,and then tomorrow someone else offers 12 oranges at the cost of 4 bannas and you traid your 8 bannas for 24 oranges then you have caught on to the stock market (in an elimentary terms). ;)

Let's say you are in the business of selling a box full of gold worth $10,000 in it. You walk into a room of 100 people with lots of money, who don't have any gold and want to buy your box for any amount you ask for. For now let's say you sell this at $100,000. You made $90,000 profit.Second scenario: When you're selling this box of gold, another seller walks in with his own box of $10,000 gold and want to sell it too. Now buyers have more option regarding sellers. Let's now say you both end up selling the gold at $50,000 now and talking a profit of $40,000 each. Simply stated, when demand is high price of commodity or stock increases, and when demand is low, the price goes down.Worst scenario is when you walk into a room with box of gold to sell, and every buyer already have two boxes of gold and don't know what to do with it. Now your box of gold becomes worth less, as there is enough supply of stock and no one to buy.Billions and billions of such transactions happens in a stock trading day and stock prices go up and down purely based on supply and demand. Demand for a stock goes high and so the prices when stock is deemed undervalued or it can go up in value and vice-versa.Stock market indicators such as DOW, S&P indices tracks a collection of leading diversified stocks from different business segments. If the indicators goes up it means the underlying stocks in that index are going up. Stock market has over 6000 stocks and it is difficult to track all of them. These indicators serves as the good statistical sample in following the strength or weakness of the market. DOW index is made up of 50 stocks symbols. S&P 500 is made up of 500 stocks symbols.