Equity Trading Mechanism


Equity trading can be economically pleasing if one pursue it in a right way, equity market comprises various investing experiences eventually leads to long-term wealth creation. However, it takes time for a newbie to hone the skills.

Online Equity Trading

It signifies an approach which includes the trading of securities via the online platform. Online trading portals simplify the trading of several financial mechanisms like equities, mutual funds, shares, and commodities. There are many online trading platforms that benefit traders and investors to buy or sell bonds, shares and other financial apparatuses.


How to Trade Online?

  • Open a Demat or Trading Account: To start online trading one need to open an online trading account connected with an online trade broking company. It is important to select an equity broker who is a registered member comprising all equity exchanges and should be certified by the SEBI.
  • Understand the Basics of Equity Market: Supply and demand are the two major functions that lead the equity market. Understanding of trade starts with attaining information about the equity market investments. One can learn from financial news, searching for information online, reading trade books, listening to financial podcasts are some effective ways to become a proficient investor.
  • Practice on Online Equity Simulator: Using online equity trading simulators are the best way to learn about equity trading. Subsequently, it’s a simulator loss doesn’t affect you, hence you can learn the equity trading confidently.
  • Create a Plan: When you trade, it is essential to think through the investment strategies you have adapted. Decide how much you can spend prior to your investment in specific companies, also consider setting the limits on the loss amount you are ready to bear.

An equity exchange facilitates equity brokers to trade company equity and other securities. An equity may be acquired or exchanged only if enlisted in the equity exchanges. Accordingly, it is the meeting place of the equity buyers and sellers. India’s premier equity exchanges are the Bombay Equity Exchange and the National Equity Exchanges.

Types of Equity Markets

There are mainly two types of equity market through which the investors can trade shares and securities offered by companies in return for money. The types of the equity market are categorized as follow:

Primary Market: Every public company offers a certain amount of equity to the public with the initial public offering (IPO), the shares are listed in the equity exchanges considered as the important constituents. Primary exchanges in India includes the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Secondary Market: Once the listing of the IPO shares are done, then it traded into the secondary market. There are platforms which offer the primary investors to exit their investment at any time. Moreover, if an investor fails to procure shares during the initial public offering (IPO) still purchase from the secondary market. The intermediaries like brokers or agents are highly involved in Indian equity market to trade securities between the stock exchanges and investors.

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