In today’s world, every age group of people wants to invest and trade in the Share Market, Here, we will explain to you What is Share Market, and what are the types of markets within minutes. So, Let’s Start:-
What is Share Market?
The Stock Market, also known as the Securities Market or Share Market, is a platform where companies can issue and sell ownership stakes in the form of stocks, and investors can buy and sell these stocks. When a company issues stocks, it is essentially selling a piece of ownership in the company to the investor. The stock market allows investors to buy and sell these stocks, and the price of a stock is determined by supply and demand.
The stock market plays an important role in the economy, as it allows companies to raise capital by selling stocks to investors, and it also provides investors with the opportunity to earn returns on their investments. Many people invest in the stock market as a way to grow their wealth over the long term. However, the stock market can also be volatile, and the value of an investor’s holdings can fluctuate greatly in response to changes in the market or the performance of the individual companies.
There are many different factors that can affect the stock market, including economic conditions, political events, and market trends. Investors can analyze these factors to help inform their investment decisions and try to identify potential opportunities in the market. There are also a wide variety of investment strategies and approaches that can be used to try to maximize returns in the stock market, such as buying and holding a diversified portfolio of stocks, actively trading stocks based on market conditions, or using investment vehicles such as mutual funds or exchange-traded funds
Types of Market in Share Market:-
In the Share Market there are many types of the market which are discussed below:-
- Primary Market: This is where new securities are issued to the public through an initial public offering (IPO).
- Secondary Market: This is where securities that have already been issued are bought and sold among investors. Examples of secondary markets include stock exchanges such as the NYSE and NASDAQ.
- Over-the-Counter (OTC) Market: This is a decentralized market where securities are traded between two parties, typically through a dealer network. OTC markets are not as regulated as exchanges and are often used to trade more speculative or risky securities.
- Dark Pools: This is a type of alternative trading system (ATS) where large traders can execute large block trades without revealing their orders to the rest of the market. Dark pools are not open to the general public and are not required to disclose information about the securities traded or the identities of the traders.
- Foreign Exchange Market, commonly known as FOREX, is a decentralized market where currencies are traded.
- Derivatives Markets: where securities such as options and futures, which derive their value from an underlying asset, are traded.
Now, Let’s discussed in brief about Primary and Secondary Markets.
Primary Market
The Primary Market, also known as the new issue market, is the market where securities are issued for the first time to the public. Companies and governments raise funds by issuing new securities in the primary market, such as stocks, bonds, or other types of securities. In a primary market, companies and governments sell new securities directly to investors through the process of an Initial Public Offering (IPO) or other forms of equity or debt issuance. The primary market is the first point of entry for securities into the capital markets, and it is a key source of funding for companies and governments.
Secondary Market
The Secondary Market, also known as the aftermarket, is the market where securities are traded after they have been issued in the primary market. The secondary market allows investors to buy and sell securities that were previously issued in the primary market. This is where the majority of securities trading takes place and it’s where securities get their real value. In the secondary market, the prices of securities are determined by supply and demand rather than by the issuer. When there are more buyers than sellers, the price of the security will increase, and when there are more sellers than buyers, the price of the security will decrease.
Over-the-Counter (OTC) Market
The Over-the-Counter (OTC) Market is a decentralized market where financial instruments, such as stocks, bonds, and derivatives, are traded directly between two parties, rather than on a centralized exchange. This means that trading takes place directly between buyers and sellers, rather than through a central exchange, like a stock exchange. OTC markets are less regulated and have less transparency than exchange-traded markets, which can make them more risky for investors. OTC markets are more common for certain types of securities, such as derivatives, currencies, and certain types of bonds, which may not be traded on a centralized exchange.
Dark Pools
A Dark Pool is a private, unregulated stock trading venue where buyers and sellers can anonymously trade large blocks of shares. Dark pools allow institutional investors, such as hedge funds, mutual funds, and pension funds, to trade large blocks of stock without the prices being affected by the orders being placed in the public market. Dark pools are called “dark” because the orders placed in these pools are not visible to the public. This allows traders to place large orders without revealing their identity or intentions. Dark pools also do not display live order books, which are lists of buy and sell orders that are visible to the public.
Foreign Exchange Market
The Foreign Exchange Market, also known as the forex market or FX market, is a global decentralized market for the trading of currencies. It is the largest financial market in the world, with an average daily trading volume of over $5 trillion. In the foreign exchange market, currencies are bought and sold in pairs, with the prices determined by supply and demand. The foreign exchange market operates 24 hours a day, five days a week, and it is where businesses, investors, and governments convert one currency into another.
Derivates Market
A Derivatives Market is a financial market where contracts are traded that derive their value from an underlying asset. These underlying assets can include commodities, stocks, bonds, interest rates, currencies, and market indices. Derivative contracts, such as options and futures, are used to hedge against price movements in the underlying asset, and also to speculate on the future movements of those prices. The most common types of derivatives are futures and options. Futures are contracts in which the buyer agrees to purchase an asset at a specific price on a specific date in the future. Options, on the other hand, give the holder the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a specific date.
Difference between Trading Account and Demat Account
A Trading Account is an account that allows an individual to trade in the stock market. It allows an investor to place buy and sell orders for securities such as stocks, bonds, and options. The trading account is linked to a specific broker or brokerage firm, and the trader must follow the rules and regulations set by the exchange and the broker.
A Demat Account, on the other hand, is an account that holds shares and securities in an electronic format. It stands for ‘dematerialized’ account, which means that the shares and securities are held electronically, rather than in physical form. A Demat account is linked to an individual’s trading account, and is required to trade in the stock market in India. The shares and securities purchased through the trading account are credited to the linked Demat account.
In summary: Trading Account is a account which allows an individual to trade in the stock market while Demat account is an account which holds shares and securities in an electronic format. Demat account is mandatory to trade in the Indian Stock Market where as Trading account is not.
Top 5 Reliable Brokers who open trading & Demat account:-
- RKSV Securities Pvt Ltd.(Upstox)
- Next Billion Technology Limited(Groww)
- ZERODHA BROKING LIMITED
- ANGEL BROKING LIMITED
- R.K. Global Shares & Securities
What is Stock Exchange?
A Stock Exchange is a marketplace where securities such as stocks, bonds and options are bought and sold, where companies raise capital by issuing shares, and investors buy and sell those shares. The price of securities is determined by supply and demand in the market and influenced by various factors. Stock exchanges have specific listing requirements for companies and also provide services such as market data, clearing and settlement of trades and risk management. They are regulated by government agencies to ensure fair and orderly trading, and to protect investors from fraud and manipulation.
In India, There are two type of exchange:-NSE(National Stock Exchange),BSE(Bombay Stock Exchange)
NSE(National Stock Exchange)
The National Stock Exchange of India Limited (NSE) is the leading stock exchange in India and the third-largest in the world by number of trades in equity shares. It was established in 1992 and is located in Mumbai, Maharashtra. NSE offers trading in a variety of securities, including equities, derivatives, debt instruments, and more. It also provides clearing and settlement services for trades executed on its platform. The NSE’s flagship index is the Nifty 50, which comprises 50 of the largest and most liquid companies listed on the exchange. In addition to trading and clearing services, the NSE also provides data and analytics, index services, and other financial services to market participants.
BSE(Bombay Stock Exchange)
The Bombay Stock Exchange (BSE) is an Indian stock exchange located in Mumbai, Maharashtra. It is the oldest stock exchange in Asia and the first in India, having been established in 1875. The BSE is also referred to as the “Sensex” which is an index that tracks the performance of 30 of the largest and most liquid companies listed on the exchange. The BSE offers a variety of securities for trading, including equities, debt instruments, and derivatives. It also provides clearing, settlement, and other related services for trades executed on its platform. In addition to trading and clearing services, the BSE also provides market data, index services, and other financial products and services to market participants.
Disclaimer
Dear Readers, All the content on the https://trendinmarket.com blog is for information purposes only. All the information is based on the author’s own experience and knowledge.
The trend in Market blog is meant to give information about the share market to the readers. The owner of this blog is not committed to the completeness and accuracy of the information written here. The reader should consult his financial advisor or do his own research before making any investment decision because the stock market is subject to risks.
Trendinmarket.com The author of this blog and blog will not be responsible for any loss caused due to any information given here.