The share market is buzzing with new investors. And why not! We can obtain good returns from share market investments by following a disciplined approach and proper trading strategy. The reason why share market investing is so advantageous is because of the diverse assets traded in it. Investors find immense possibilities as they get the opportunity to exploit the potential of several types of securities. If you are also looking to give a head start to your financial journey, the share market is the right place. So, you may want to discover it a bit more before making your first investment. Here are the 10 most important facts everyone should know about the share market.
1. Stock Market : A stock market is a place where all kinds of financial securities are traded among the investors. Basically it is a wide network of many financial institutions which mainly include the stock exchanges, depositories, and stockbrokers.
2. Stock trading : Stock trading is buying and selling of financial securities. And the place where any kind of trading takes place is known as a market. That is the reason we are familiar with the word “stock market”. Based on the things exchanged, markets are named. So, the stock market is a place where stocks are traded.3Stock exchanges : They are the marketplace where trading of assets takes place. It provides a platform for the investors to trade securities. It is also a meeting place of companies and investors. It is here that the companies list themselves and traders trade their shares. The New York Stock Exchange is the largest exchange of the world. In India there are two prominent stock exchanges. They are the Bombay Stock Exchange (NSE) and the National Stock Exchange (NSE). NSE is currently the 9th largest in the world.
4. Investment accounts: The investment accounts are also known as brokerage accounts. Investors need two types of accounts to begin trading in the share market.
- Demat account: A demat account is a repository of all the securities we trade in the share market. It holds the assets in electronic format when we buy them.
- Trading account : A trading account allows investors or traders to place their order in the share market. Investors will buy and sell the securities traded on stock exchanges through a trading account. When you place your order from it, the broker will send it to the concerned stock exchange.
5. Old Stock Trading mechanism: Previously, buying and selling took place in an outcry system. At the stock exchanges, the traders or their brokers verbally mentioned their bids. After the stock exchanges went digital, the trading accounts came into use. The outcry system was replaced with electronic orders placed through trading accounts. Today, the entire process is completely digital. Investors’ buy and sell orders reach the brokers and exchanges electronically. This increased the pace of transactions.
6. Indices: You may have heard about NIfty 50 and Sensex. They are the benchmark indices of NsE and BSE respectively. An index is a basket of top companies listed on an exchange. The indices are useful to estimate the overall mood of the market.
7. Stockbrokers: Financial firms that provide services to facilitate financial transactions in the share market. Their main job is to offer investment accounts and process investors’ orders There are several stock brokers in India right now. Many have established themselves as go-to brokers. Renowned firms like Kotak Securities top the list of reliable brokerage houses.
8. Online trading is the new norm : Ever since the advent of online trading platforms, online trading has gained immense popularity. We can find a stock trading app on popular app stores like play store and ios app store. Smartphones also played a pivotal role in attracting investors to the online world of investing. Today, anyone with a smartphone and internet connection can start stock trading. Opening brokerage accounts on a stock trading app like “Kotak Stock Trader” is quite fast and easy.
9. World’s costliest stock : Warren Buffet is no unknown name. His company, “Berkshire Hathaway” is the most expensive stock which costs around 400,000 USD or Rs. 2.98 crores.
10. There’s enough scope for all : The Indian share market is underused. Only a meagre 3-4% of Indians invest in the share market. Although increasing financial literacy has increased the numbers, there is still a huge scope. So, we can exploit the huge potential that is yet to be explored.