The first thing to know in stock market is world market timing and index. Let me explain with the help of an example, imagine a trader sells his stocks as soon as the market opens because the market is negative, but he does not check the trend in world market..Now imagine Friday is a holiday in Indian market…when the market opens on Monday, this trader sells his stocks quickly thinking that the market is in the negative trend. Unfortunately, he does not know that US market is five dollars high Monday. He does not bother to check the fluctuation in US on Friday, and sells his stocks in the Indian market. Remember the festival holiday is only for India not for US. This is why it’s important to track the world market timings.
Stock exchange is like a super market ….how they bring in the stocks of vegetables and fruits…likewise the company owners list out their shares in the exchange. India has two major stock exchanges…BSE and NSE…BSE started in 1875 and NSE started in 1992 and they started trading from 1994, it’s the world’s largest derivative exchange. What happens in the backend is one type of trading mechanism…now you may think that the fluctuations in prices are automated or someone fixes the price of those products. Both of this isn’t true. It’s purely based on the buyers and the sellers. An order book matches the best offers and the best bidders and gives them the priority and trade begins with that price.
Now let’s look at the two kinds of market.
Primary market and secondary market
Before a company is listed in the exchange, the transaction that occurs between the company and the investor is called primary market…whereas secondary market is the next stage of buying and selling which occurs after the initial transaction between the company and the investor. Here trading takes place between an investor and another investor and the stock brokers are the mediators in this process,.