What Is Stock Market And Its Working?


The stock market is the platform that facilitates companies and investors in the primary and secondary markets. Companies issue their shares in the stock market, and individuals can buy and sell these shares and other types of securities in the secondary market. Stock markets are the reflection of the economy. Numerous factors make markets volatile. Whether it's a change in the interest rate of the US Fed or quarterly profit announcements by companies, the market responds to each change because of its volatile nature. It brings huge uncertainties to the stock market. 

Individuals cannot connect to the stock market and start trading financial securities directly. At present, the market operates online following an online trading system. There are many stock exchanges where individuals can place trade orders. Investors need a demat account and trading account to hold their securities and trade them online. These are both accounts you can open with a SEBI-registered stockbroker. They help investors know the market as they keep updating their clients with the current information about the market. 

In short, the working system of the market: your stockbroker passes on your trade order to buy or sell the securities to the stock exchange. The exchange searches for another individual looking for or with the same securities. Once the exchange finds a seller and a buyer, it's a price. It settles the trade at an agreed price and finalizes the transaction. Now your broker transfers the securities in demat accounts. 


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