Basics of Stock Market - Beginner

Learn the basics of online trading

Market Capitalization

It is the sum of all the company's assets, based on current share prices and outstanding stock. If a share is worth Rs. 100 per share, and one lakh shares are held by public investors, its market capitalization would be Rs.100,00,000.

Bull and bear markets

It is often a mystery why the terms bull and bear are used to describe markets. This is due to the defense mechanism that these animals use when attacking. The bull will thrust its opponent into the air while the bear will swipe its paws downwards. Market terminology refers to a bull market if it's in an uptrend, and a bear market if it's in a downtrend.

Settlement

Clearing Corporation of India is responsible for settlement. Clearing Corporation of India is responsible for clearing trades to determine counterparties' obligations to deliver funds/securities according to the settlement schedule. Buyer/seller transfers funds/securities, and then receives securities/funds. The buyer/seller also acquires ownership of the securities/funds.

Settlements in India take place in T+2 days. 'T' refers to the date of the transaction. Monday to friday are only counted as working days. If a transaction was completed on Friday, it will be settled Tuesday.

How to read stock quotes

Last Traded price (LTP: LTP refers to the stock's last traded price.

Change Divide the difference between the new and old closing prices with the old closing prices and multiply it by 100 to determine the percentage change. The stock will be written in green if the change is positive, and red if the stock falls in price.

High/Low Stock exchanges use this measure to prevent panic among traders during high volume buy/sell of a stock. Circuit high is the price at which a trader can't quote the selling price, and circuit low refers to the price at which a trader can't quote the buying price.

Volume This shows the total shares traded that day. It is usually listed in hundreds.

Purchase Quantity: This is the total amount of shares that are available for purchase.

Total sell Quantity: This is the total amount of shares that will be sold.

52 Week High/Low This shows the highest and lowest stock price in a year. 52-weeks. This allows investors to understand the stock's trading range over a time period.

Name, Ticker symbol and Ticker symbol: The stock can be identified easily by the name of the company as well as its unique alphabetic title.

High/Low Stock prices fluctuate during trading hours. This indicates the highest or lowest stock price a stock has reached during the day.

How is your order processed?

Stocks and derivatives, as well as financial instruments, are traded on the stock exchange. SEBI is India's central registry for all market participants, including the companies that issue shares and the brokers who trade. Investors buying and selling also need to be registered.

The company is first listed on the primary market via an IPO. After that, stocks are traded on the secondary market.

What happens when you place an online order?

Step1 The order is placed at the terminal.

Step2 The broker acts as an intermediary (between you, the investor, and the exchange). The exchange will receive your order.

Step3 After confirming your details, the exchange will find a counterpart for your order to avoid defaults by buyers and sellers.

Step4 The exchange confirms to the broker that the counterparty is available.

Step5 The broker debits/credits the account and settlement occurs on T+2 days.


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