How markets actually work
What happens between pressing buy and owning something, and who is holding it?
9 of 9 chapters published
Chapters
Beginner
- Why a company sells sharesA company raises money once, from the people who buy at the issue. Everything after that is investors trading with each other — and understanding which of those two you are doing explains most of how markets behave.
- The exchangeNSE and BSE do one job: match orders and publish the result. They do not set prices, do not hold your shares, and are not the other side of your trade — and knowing what they are not explains most of what confuses beginners.
- Who is whoSix institutions stand between you and a share, each doing one job. Knowing which one holds your shares, which one takes your order, and which one guarantees the trade tells you who to call when something goes wrong.
- Demat and trading accountsTwo accounts, two jobs, usually opened together and constantly confused. One holds your shares; the other places your orders. What happens to each if your broker fails is the reason the distinction matters.
Intermediate
- Placing an orderA market order asks for speed and accepts any price. A limit order names a price and accepts that it may never trade. Choosing wrongly is one of the few beginner mistakes that costs money instantly.
- Settlement, and what T+1 meansYou own the shares the moment the trade matches. They arrive in your account the next working day, and the clearing corporation stands between you and the stranger on the other side for the whole of that gap.
- Reading a quoteThere is no single price. There is what a buyer will pay, what a seller will take, and the gap between them — which you pay every time you trade, whether or not you notice it.
- What an index measures"The market was up 1%" means a specific, weighted, rules-based number moved — not that your holdings did, and not that most shares rose. What the index leaves out is as important as what it counts.