What is Share Market | How Share Market Works

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Share market

What is the share market and how it works, how to buy shares, know the detail guide of share market in easy language. Whenever we imagine about a market, our mind create an image of a place where there is many shops or a mall where you can go for shopping but the Share market is not such type of market. The buying and selling of shares in the share market is done entirely by the computer software in an automated manner. Any share buyer or seller place his order on the exchange by his broker and after a moment’s notice, according to the pending orders, the deal matches automatically.

How Brokers Earn

Broker of share market

In the working hours of the stock exchange, brokers place their order in their order terminal for their customers. In return, the broker gets brokerage.

Categories of Share Market

There are three main categories in share market Stock Exchanges, Brokers and Investors. Brokers are members of the stock exchange and only they can trade in that stock exchange. Clients can not directly buy or sell shares, they have to go through the brokers.

Stock Exchanges

There are mainly two stock exchange BSE i.e Bombay Stock Exchange and NSE i.e National Stock Exchange on which shares are traded. BSE and NSE are the world’s largest stock exchanges. Most of the companies whose shares are traded in the market are listed on both the stock exchanges but it may also be that a company is listed on one of these two exchanges.

Work process of Share Market

Share market

Majority of the country’s major banks or their subsidiaries and other large financial companies work as brokers in these exchanges. Customers can go to these broker companies and open their account with the broker by giving information about their demat account. Thus the demat account of the customer gets linked to the account of the broker and the shares purchased or sold are transferred from the customer’s demat account. Similarly, the customer can also link his bank account with the broker’s account, from which the amount of the shares purchased or sold is transferred to the customer’s account. The shares purchased by the customer remain in their demat account in electronic form whenever a company declares the dividend, then the amount of dividend is reached in the bank account linked to the demat account. Similarly, if the company announces bonus shares, bonus shares also arrive in the shareholder’s demat account. When the customer sells the shares, that share transfer is transferred from the same demat account.

Requirement to do Business in Share Market

To do business in shares, an investor must have a demat account, a trading account with the broker and a bank account linked to it. Many banks also offer the facility to open three in one accounts. Most Brokers House also provides you with the convenience of online stock trading, apart from this, you can also order your call.

Conclusion

If you also want to invest in the share market, then it is very important for you to understand what the share market is and how the share market works. So, read the full article.

I hope I have covered everything related to Share Market, If I missed something please let me know in comments. Thanks!

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