How the stock market works

The stock market works through a group of intermediaries. They help in various processes like engaging traders, opening account, advising people, money settlement, maintaining share/stocks in accounts and dividend distribution.

The main market Intermediaries are:

  • Banks
  • Stock Brokers
  • Depositories
  • Custodians

Then we have market participants who participates in trading or investing over the stock exchange:

  • FII and DII
  • Promoters
  • Retail Investors

The actual trading mechanism in the stock market

stock market trading machenismThere are millions of retail investors trading everyday on stock exchange. They simply open a trading and DMAT account through a stock broker and connected to their trading platform. The stock broker then is connected to the server of the stock exchange. This brings all the traders on one server. The server of exchange- Now, the trader can buy or sell online.


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