Understanding the stock market is the first step towards understanding the stock trading basics. What is a stock Market. A stock market is a place where you can buy shares and sell shares. The capital of public limited companies are divided into small portions and sold to investors as initial public offerrings when the company is established or incorporated as an entity under the Companies Act. Thereafter a share holder who has shares of the company can sell it or any one interested in buying the shares of the company can buy it. This is done thru a stock exchange. With the growth in technology now stock exchanges have become virtual stock exchanges where trading is done online.

In other words stock market is the place where one can sell these shares or buy from those who own shares and are willing to sell. The market price of the share is decided on the basis of the performance of the company. If the company is performing well and future performance is expected to be the same then the price of the share will be more than its face value. If the face value of the share is Rs.100/- the market price will be anything more than that depending on the future expectations of the investors and its supply and demand. If the performance of the company is not good and the future prospects are also

Brick and Mortar Stock Exchanges are shutting down with growth in technology and online trading of stocks. The system and method of trading is different in these exchanges from todays online trading systems. Buyers and sellers assemble in a stock exchange to buy and sell. Usually the buying and selling is done thru a stock broker who is registered with a stock exchange to trade. Individuals cannot go direct to the stock exchange and start buying or selling shares. They have to do thru a registered stock exchange broker. The stock trading happens in these exchanges thru physical share certificates. Once the transaction is thru the shares certificates have to be transferred and registered in the name of the buyer. But, all this has almost become history now. Today it is online trading.

A Virtual Stock Exchange.

Online Stock Trading. Online stock trading is done thru virtual exchanges. There is no specific place where brokers have to assemble for doing their stock trading. Sitting in their offices or their homes they can carry out the trading activity. As an individual you can do it direct from a computer terminal at your home. All information that is required for carrying out a trade is available on the monitor of your computer. Information like the current prevailing price of the stocks, the trading lot of the stock, the quantity that is so far exchanged on the day, the demand and supply for the stocks, and much more are available online. The transaction happens online here. The instruments for trading that is the shares are in a DEMAT form. That is they don’t have a physical form. You hold them in a demat account. A demat account is like a bank account. Instead of depositing and withdrawing money, you deposit and withdraw shares. When you buy shares the quantity is credited in your demat account and when you sell it, it is debited to your demat account.

With online stock trading, all the information that is required by you for stock market trading and investing is available online. Online stock market quotes in the form of tickers are provided by the virtual stock exchanges such as the NYSE, NSE, etc. Every country today has more than one online stock exchange. for more on Online Stock Trading