Stock trading on Stock Exchange
Once the owner of the company announces initial public offer (IPO), then that stock becomes available on the stock exchange. The stock exchange is a place where buyers and sellers of the stock meet and decide at what price they need to trade particular stock.
At initial days stock exchanges were a physical venue, where people gather together and decide buy or sell on the particular stock. Nowadays stock trading happens virtually where traders gather together on the virtual platform of computers and networks and place there trade. This trading then recorded electronically.
The stock market is a secondary market where buyers and sellers trade on the stock, owners of the shares can transact with market buyers. The company owner cannot trade in the market with their own stocks, it is restricted. They can do this outside the work frame of stock exchanges in terms of shares buyback. When traders place stock buying order, he does not buy directly from the company. Vice versa when trader put sell order of the stock he is not selling his current holdings directly to the company. This buying and selling transactions usually place in between buyers and sellers of the existing stockholders.
Let’s take an example to understand, Shyamlala bought 100 shares of Hero Honda Company two months back. The stock price increased by 100 rs /- in the one-month time frame. Now Shyamlala wants to sell their holding at the good profit, in stock selling situation he does not sell his shares to the company directly. He can sell his shares to the buyer of that stock, who is expecting price hike and wish to buy Hero Honda stock.
Initially, stock exchanges were mainly in port cities or inside trading hubs such as Amsterdam, and London. In late around 18th-century stock market beginning takes place in America. New York stock exchange is the notable stock market in America and World. New York stock exchange started by a signing an agreement with 25 stockbrokers.
The trader can rely on modern stock market exchanges as their transaction is going through the fir valuation in the age of regulations. Now day’s number of stock exchanges appeared in the world, many of them electronically linked together.
Now the question arises on stock prices. The price can be decided in many different ways. Usually, the stock price is set by a common buyers and sellers bid price. A bid price is the price at users wishes to buy their stock. Vice versa offer price is the price at which somebody wishes to sell their stock.
Many investors and traders concern belong to the indices also known as indexes. Indexes are formed by multiple stock price aggregation. This aggregation relies upon each individual stock price. When people discuss stock market they usually talk on indices such as Sensex, Nifty, and Nifty 50 etc.
The S & P BSE Sensex also called Sensex, full form is S& P Bombay stock exchange sensitive index or BSE 30. Sensex 30 contains well known established and financially strong companies. Sensex is a pulse of Indian stock market as it contains high valuation and most traded companies on which Indian economy relies. The full market capitalization of S&P BSE Sensex is around 55 thousand billion dollar. Whereas NSE (National Stock Exchange) Nifty is India’s benchmark stock market. NIFT 50 encapsulates top 50 companies, which are well established by their business, trust, and financial growth. NIFTY 50 is a pulse of Indian stock market.