How the Indian Stock Market Works

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Stock market investors totally confused whenever they lose money while investing in stock market. It’s more important to understanding how it works and what is stock exchange will help you to make good investment decisions. Fortunately market is not more volatile like it seems to be. Stock market is really a place where trader or investors can sell and buy shares of a picky company. Main goal of each and every trader or investors is to obtain the higher return on their investment the reason is to buy the stock previous to the price move up and then to sell it previous to it goes fall down.

The Markets play a very important economic role, helping big companies increase finance and providing access to a different stream of capital alongside revenue and loan finance of company. The markets are a lot of trader traded worldwide (globally), with billions in processed of transactions all single day across the main global exchanges. But how exactly do operate stock markets on a technical point of level, and what is it about the stock markets particularly that attracts the best and brightest from every people try of life to make their luck?

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Stock markets give the better prospect for traders to make (and lose) riches speculating on the price of shares and other securities. All traders can understand market behavior and try to expect market movements in price to ride both negative and positive and trends across picky industries and companies, allowing the free-flowing market trade of shares in both directions exclusive of the require negotiation or for physical interaction of contract terms.

Large shares standardized instruments which are enable the free transaction from one stock market trader to another without the required for registration or any further burden of administrative. They are the lifeblood of a lot of rising plc, and give strong indicators of economic prosperity and outlook. Operate of the markets by build a platform for sellers and buyers of securities to meet and swap their share assets, which in and of own produce an often tax-free ongoing yield in the form of dividend payouts.

Real-time trade in stock markets throughout the business day, and continually match orders on both sides of the table to make liquid trading possible. Stock market traders can either purchase shares in companies they predict to perform well, or often sell shares they don’t yet personal in the anticipation of purchasing them back at a lower price point is also known as ‘going short’ or short selling).

With the help of a stock market advisory or broker, who performs the trades automatically on basis of demand, the market trader is able to connect in active speculation throughout the intraday trading, and really across a wider timeframe of months and even years is totally depend on the correct nature of each trade. The market advisers or Brokers will often also offer financing for definite trades, allowing market traders to influence the gains (and losses) beyond the limits of their individual resources.

For those stock market trades that are unmet by market demand, i.e. persons for which there is no related to buyer or seller, a designated by a ‘market maker’ steps in to fill the order, make sure that shares can be traded freely even where the markets take a mainly bearish trend to a picky stock or index.

The main global stock markets manage easily throughout the day to permit live trading without the required for meeting face to face or exchanging physical share certificates. In this sense, the markets give an ideal opportunity for determined trading organizations and individuals similar to invest, with the probable for significant gains for the all trader.

Methods of selling and buying

Learn about different methods of selling and buying of shares the in stock market for basics learning series.

Here are the 3 important methods of selling and buying of shares in Indian share market.

  1. Market Order
  2. Limit Order
  3. Stop Loss Order

Market Order

When you put sell or buy stock price at rate of market or choose a market order trading in option terminal then the stock price gets executed at the latest rate of the market. The market order gets executed instantly at the latest available price.

In market order the shares will get executed at the best latest available price. A market order is used if you want to execute your order very fast and at available prices.

If you desire to sell or buy shares at any exact price then market orders is not appropriate for you then have to go for limit order. A market order is for those who want to sell or buy instantly at the latest available price.

Limit Order

It’s completely different from market order. In limit order the selling or buying price has to be described and when the price of share comes with that price then the order will get executed. But here it’s not persuaded that the price of stock will come to your limit order and the order gets executed.

In different words in order of limit the particular price is mentioned and investor or trader wait till the price of the stock reaches that price and once the price of the stock reaches that price then the order will get executed.

Intraday (Day) traders have to take all precaution as applying limit order, particularly who pick of margin amount In Intraday (day) trading, because you have to close every your transaction previous to 3:30 PM (Indian time) and if the stock price doesn’t arrive at to your limit order after that your limit order will be open (pending) and then you must go through the penalties.

Highly stop loss order and limit order are used together to reduce the risk.

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Order of Stop Loss

Order of stop loss is used to minimize the losses. This is the most important term particularly if you are doing intraday (day) trading. Order of stop loss as the name point to this is used to minimize the losses.

In order of Stop loss the trigger price has to be mentioned, by the stock market trader, and once the rice arrived at the trigger price the order to get executed with the top price existing between the limit price and trigger price. For example – Assume the trader perched the RIL (Reliance Industries) at Rs 1000.

So he puts the order of following to protect his losses.

The order of limit Rs 995 and stop loss trigger price at Rs 990 so if the RIL (reliance industries) price of the stock begins falling and if it reaches 985 then his trade executes with the latest available market price.

Note – The stop loss trigger price is placed under the limit price in the purchase order and higher than the limit price in a sell order.

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