Before moving into an understanding of EQUITY MARKET TRADING, let us know the meaning of the word “equity”. We would have by now, heard the word EQUITY shares in the context of share markets that we talk about in the context of words like SENSEX, NIFTY fell down, rose up etc .,
EQUITY shares are the shares issued by the company, wherein the holders are treated with ownership rights. They don’t have right to claim fixed dividend like in the case of preference shares. So these EQUITY shares are traded in Stock exchanges for giving liquidity to the holder’s investment. A holder of these shares can sell the share at any time and buy the share at any time in the stock market.
These EQUITY shares are listed on NSE AND (OR) BSE. These exchanges provide us with a marketplace for trading with EQUITY shares. And hence it all sums up to equity market trading.
Working Of Equity Markets
These MARKETS are basically NSE AND BSE. They allow the entire process of trading or investing happen for a trader or an investor who puts funds. These stock exchanges act as the middlemen who will facilitate the buyer to buy shares and the seller who sells the shares. However, there is a proper channel through which a person can buy or sell shares which are listed on a stock exchange. For those of you, who got stuck with the word listed shares, let us break down into simple words. EQUITY shares of a company will be eligible to be listed on a stock exchange for our trading and invest purpose ONLY UPON fulfillment order Tramadol of certain norms put by SEBI, to the companies, intending to get their shares listed. Upon application and satisfaction of norms, shares will be listed and they will be available for buying and selling in stock markets. Let’s discuss the internal flows in connection to what happens when we buy and sell shares in another article which I am going to break down to you in the most simple language, so don’t worry about it.
Few Crucial Terms And Conclusion
Though we need not understand the whole process, it is important for us to know about words like PROPRIETARY TRADING, AGENCY TRADING, MARKET MAKERS etc.,
Trading happens in two ways. You can trade for yourself i.e., you can buy or sell shares, this way of buying and selling is called proprietary trading.
You can also give that work of buying and selling to an agent by authorizing the agent in a prescribed manner, this way is called Agency trading.
In simple words, In PROPRIETARY TRADING, you sell and buy or buy and sell shares AND
In AGENCY TRADING, an agent will do that buying and selling activity on your behalf after taking authorization from you. Needless to say, that, they will charge for this service.
These are usually the brokerage houses which help a stock to maintain adequate levels of liquidity in the stock market. Hence they ensure that there will be a buyer READY TO BUY if someone wants to sell a share and there will be a seller READY TO SELL when someone wants to buy a share.
Thus, Equity Markets Provide A Wonderful Trading Place For The Ones Who Deal In Shares