Trading Procedure of Securities

A stock market is where an investor can buy or sell shares of a company. It will act as a link between the seller and a buyer of shares. A stock market is where corporations meet investors to buy or sell their equities. Several securities in the market are traded through these exchanges, from bonds to equities. Exchanges act as a relationship between investors and corporations to provide liquidity to run their business. It also ensures that the whole procedure is streamlined and somewhat takes place. 

Functions of Stock Exchange

As the name suggests, the primary function of a stock exchange is the linkage of corporations to investors with the involvement of the central government, and it’s a place where investors and traders can buy and sell securities. Financial securities like stocks, bonds, and derivatives are bought and sold here. 

An exchange collects all the data from selling to purchases of shares and the volume of selling and buying of these shares, which in turn assigns value to these securities, meaning, if the demand for a share exceeds its supply, there is an increase in the value of this stock meaning that a buyer has to pay more to buy that stock and a seller will receive more to sell that stock and if the supply of the stock exceeds the demand, we see a fall in prices of these stocks which means a buyer will have to pay less to buy this stock and a seller will receive less to sell this stock. 

There are 9 stock exchanges in India, but most of the trading takes place on two stock exchanges- the national stock exchange and the Bombay stock exchange, also called NSE and BSE, respectively. 

The trading procedure for dealing at the stock exchange

• The trading procedure for dealing at stock exchange starts with selecting a broker which suits you. When choosing a stockbroker, things that are taken into consideration are that the broker should be SEBI registered, a stockbroker should always be SEBI registered brokerage. Brokerage charges, brokerage costs, and fees are other things you need to look at while choosing a stockbroker, especially if you’re on a budget. Still, several brokers charge extra fees, and costs for additional services do look for those hidden charges. Look for the credibility of the stockbroker, look for its track record, and you will get to know if the broker is credible or not.
• The second step is opening a Demat account, also known as a dematerialized account. This account holds the shares and all the securities you buy electronically. It helps to keep a record of all the investments you make. It has made the buying and selling of securities a digital process and helped regulators like SEBI enforce better governance. There is no to near zero risk of loss or theft by storing securities in digital form.
• The third step that an investor takes is placing an order. After selecting the company of whose securities he wants to buy, the investor will place an order with the stockbroker through the mail, telephone, or other mediums. You can place an order with several modifications like stop-loss, market orders, limit orders which gives you an advantage while trading securities.
• The execution of the order is what comes next. It is the completion of the buying or selling of the given security. When the order gets filled, the trade is submitted by the broker, and the broker finds the best possible way to execute that order. The broker sells or buys the stocks the investor instructs him to. 
• Settlement is the last step that comes in the trading procedure of securities. It is the period between the date of trade and the time when the trade is considered to be final.

Conclusion

The procedure for dealing at the stock exchange is an easy process, but you need to keep some things in mind, like finding a broker that provides the best services you require. From opening a Demat and a trading account to the settlement of the order, the whole trading procedure of securities is a highly simple process. All you need to do is find a trading strategy and follow the given steps, and you can start your trading. You can go for individual stocks, bonds, mutual funds, or index funds, and there are a lot of securities that you can buy and hold.