The stock market is the system of exchanges and dealers where shares in public companies change hands. Here is what it is, who is in it, and where penny stocks sit within it.
The stock market is the collection of exchanges and dealer networks where shares in public companies are bought and sold. A share is a unit of ownership. When a company sells shares to the public it raises money it does not have to pay back, and in exchange the buyers own a slice of whatever the company becomes.
Two distinct things are usually meant by the phrase. The primary market is where new shares are created and sold by the company itself, in an IPO or a later offering — this is the only part where the company actually receives the money. The secondary market is everything after that: investors trading existing shares among themselves. When you buy a stock in your brokerage account you are almost always in the secondary market, buying from another investor, not from the company.
Every trade has a counterparty. Some are long-term investors, some are funds rebalancing, some are algorithms holding for milliseconds, and some are market makers whose job is simply to be available. You are rarely trading against one identifiable opponent, which is worth remembering whenever a move feels personal.
Price alone does not make a stock a penny stock. A company can be large and its shares cheap, or tiny and its shares expensive. What defines this end of the market is a combination of low price, small market capitalisation, thin trading and — frequently — the absence of the disclosure requirements that come with a major exchange listing.
That last point is the one that catches people. A stock quoted on OTC Markets may file very little, or nothing at all. The mechanics of buying it look identical in your brokerage account; the information available to you before you do is not. See what is a penny stock for the fuller definition.
Trading guides on StockMarketWatch — the same material for large caps, with live data attached.