How the stock market works: a beginner's overview

The stock market is a place where shares of listed companies are bought and sold. When you buy a share, you own a small part of that company.

Key terms

• Exchange: the platform where trading happens. In India the main exchanges are NSE and BSE.
• Broker: the intermediary that places your orders. You need a demat and trading account.
• Price: set continuously by buyers and sellers. When more people want to buy than sell, the price tends to rise; when more want to sell, it tends to fall.
• Order types: a market order executes at the best available price, while a limit order executes only at your price or better.

Before you start

Prices can fall as well as rise, and you can lose part or all of the money you put in. Learn the basics first, start small, and decide how much you can afford to lose before you place any trade.

This guide is educational and is not investment advice.