Stock market Overview
Stock market is a place where buyers and sellers carry out buy and sell transactions on stocks.
What is a stock or share of a company?
One stock of a company represents a part ownership of the company. A company divides its ownership in terms of stocks. For example a company can divide its shares into say 10000 shares and sell such shares in the stock market as part of IPO (initial public offering). If you buy 10 shares of the company, you own 0.1% of the company. After the IPO, the investors who have purchased stocks, will start selling the shares as part of profit booking and there will be new buyers who buy these stock with view that the stock price will go up and such transactions go on.
What is stock market?
Stock market is place where the buy and sell transactions take place. Stock market provides an online platform to accept the orders, match the buy and sell orders according to the buyer’s and seller’s intended price and execute the transaction. This transaction is called Trade. The stock market is implemented by stock exchange.
What is Primary and secondary market?
When initially a company sells it’s shares/stocks to public and other institutions, it’s is called IPO (Initial Public Offering) and the market facilitating this process is called Primary market.
After the IPO, the shares are said to be ‘listed‘ in the exchange. The market where shares are traded after IPO or listing is called Secondary market.
What is a stock exchange?
The stock market process is implemented by stock exchange. In India we have two major exchanges for stock trading.
1. NSE – National Stock Exchange
2. BSE – Bombay Stock Exchange
How to trade in stock market? What is the role of broker?
To carry out buy or sell transactions in the stock market, you need to open a trading account with a broker. Broker is an entity which has the ability to submit the trade to stock exchange on behalf of the trader/investor.
Broker
Broker is an organization who is licensed to carry out transactions submitted by its customers. They have dedicated infrastructure which links their trading interface to the stock exchanges. The brokers provide various online screens for buy/sell transactions and for adding and withdrawing cash from the trading account.
Types of Brokers
There are two types of brokers – Full Service Brokers and Discount Brokers
Full Service Broker
Full Service Brokers provide trading platform and other associated services which can include linked bank account, trading advise or recommendations, dedicated relationship manager etc. For these services they charge higher brokerage on transactions. Examples of such brokers is ICICIDirect, HDFC securities, Kotak Securities, Motilal Oswal etc.
Discount Broker
Discount Broker provide only trading platform for carrying out the transactions. They do not provide any additional services. Their brokerages are very low as compared to Full service brokers. Examples of such brokers are Zerodha, Upstox, Fyers, Angel Broking, Alice Blue etc.
Zerodha is one of the preferred discount brokers in India. They have a quick online account opening process. You can open trading account using the link below
https://zerodha.com/?c=EJ5179&s=CONSOLE
Please follow us on Instagram handle – Tradeyoga Finance Instagram
Please read the first part of this series below
Stock market trading and investing Overview
Fundamental Analysis of Stocks
#tradeyoga