From the perspective of an investor, buying and selling stocks seems pretty simple. If you use a full-service broker, just call him or her up on the phone and place an order for 100 shares of Coca-Cola. Within a few minutes, you'll receive a confirmation that your order has been completed, and you'll be the proud new owner of Coca-Cola's stock.

Behind the scenes, however, there's a lot of action that takes place between your order and the confirmation.

Here's what has to happen:

1. You place the order with your broker to buy 100 shares of the Coca-Cola Company.

2. The broker sends the order to the firm's order department.

3. The order department sends the order to the firm's clerk who works on the floor of the exchange where shares of Coca-Cola are traded (the New York Stock Exchange).

4. The clerk gives the order to the firm's floor trader, who also works on the exchange floor.

5. The floor trader goes to the specialist's post for Coca-Cola and finds another floor trader who is willing to sell shares of Coca-Cola.

6. The traders agree on a price.

7. The order is executed.

8. The floor trader reports the trade to the clerk and the order department.

9. The order department confirms the order with the broker.

10. The broker confirms the trade with you.

That's how a traditional stock exchange works, but much of the action that takes place when you buy or sell a stock is being handled with the assistance of computers. Even if you bought a stock that trades on a stock exchange, your order may be executed with little or no intervention by humans. You can log on to a brokerage firm's Website, enter an order, have the trade be executed, and receive a confirmation all within sixty seconds or less.

And of course, as an Internet-proficient investor, you already know that you don’t need a broker to execute a trade.

In our next blog, we'll take a look at the major stock market indexes - the barometers of investment performance.