Trading in the stock market always seems very easy when explained in a theoretical manner, but is it so?
And the answer is no before we start stock trading in the market we should make it very clear how it can be done.
Before anyone enters into the stock market must clear with this few terms which can help them later on.
Its a market place where already-issued securities trade in an electronic manner from one trader/investor to another trader/investor, via electronic transaction. All the transaction takes place on the Stock Exchange, a place where trader & investors purchase & sell listed securities like Shares Debentures & ETF.
Hierarchy of Stock Market:-
The market run in a hierarchy which makes its function smooth, easy to understand & handle.
Securities Exchange Board of India:- Acting as a regulatory body manages the smooth functioning of the market.
Stock Exchange:- A platform where one can do trading in financial securities via electronic mode, major exchanges are NSE BSE & MSEI
Depository:- An institution registered under depositories Act 1996 for holding, receiving and transferring securities in electronic form.
Broker:- As defined by SEBI an Intermediary who provide a platform to investors & traders to trade on an exchange
Client:- A client can be defined as any individual Resident / NRI, group of person, Any Financial Institution Foreign / Domestic
How can you trade in the Stock Market:-
The basic requirement for an individual to trade in the stock market is a DE-mat & Trading Account. Which is opened with a broker who provides us with a platform to trade on stock exchanges.
As a trader or investor, you are having to option to trade In the market you can do online trading as well as offline, In the online process, you can directly access through web portal or application through mobile or laptop, whereas in Offline you need to make a call to the authorized dealer in the brokerage firm and the dealer will submit the order on your behalf.
Daily purchase and sale of shares in the market are termed as Intraday Trading, Whereas Purchasing & holding shares for long tenure is termed as delivery trading.
The market actually runs in two trends Bull phase and Bear Phase, when the market goes on high with positive demand & supply is Bull run, whereas when there are less demand and supply is more the market runs in Bear Phase.