From Order Placement to Settlement
Many beginners know what shares are but feel confused about how buying and selling actually happens.
This page explains how share trading works in India, step by step, in a simple and practical way.
Step 1: Opening the Required Accounts
To trade or invest in shares in India, you need three basic accounts:
1️⃣ Demat Account
- Stores your shares in electronic form
- Similar to a digital locker for shares
2️⃣ Trading Account
- Used to place buy and sell orders
- Connects you to the stock exchange
3️⃣ Bank Account
- Used to transfer money for buying shares
- Receives money when you sell shares
Most brokers provide all three accounts together.
Step 2: Choosing a Stock and Placing an Order
Once your accounts are ready, you can place an order using your broker’s platform (app or website).
You choose:
- The company’s share
- Quantity
- Type of order
Step 3: Types of Orders (Beginner Level)
Market Order
- Buy or sell at the current market price
- Order is executed immediately
- Price is not guaranteed
Limit Order
- Buy or sell at a specific price
- Executed only if the market reaches your price
- Gives more price control
For beginners, understanding these two is enough.
Step 4: Order Execution on the Exchange
After placing an order:
- It is sent to NSE or BSE
- The exchange matches buyers and sellers
- Once matched, the trade is executed
This happens in seconds.
You do not interact with the other party directly — the exchange handles it.
Step 5: Settlement of Shares (T+1 System)
In India, trades follow the T+1 settlement cycle.
- T (Trade Day): You buy or sell shares
- T+1 Day:
- Shares are credited to buyer’s Demat account
- Money is credited to seller’s bank account
This makes the Indian market one of the fastest settlement systems globally.
Step 6: Holding or Selling Shares
After shares are credited:
- You can hold them for long-term investing
- Or sell them later when you choose
There is no compulsion to sell quickly unless you are doing intraday trading.
What Is Intraday Trading? (Quick Overview)
- Buying and selling on the same day
- Shares are not delivered to Demat account
- Higher risk and requires experience
Beginners are generally advised to avoid intraday trading initially.
Costs Involved in Trading
When trading shares, small charges apply, such as:
- Brokerage
- Exchange charges
- GST
- Securities Transaction Tax (STT)
These charges are usually small but should be understood over time.
Is Trading Safe in India?
Yes, when done through:
- SEBI-registered brokers
- Regulated exchanges
Safety is ensured by:
- SEBI regulations
- Exchange systems
- Clearing corporations
However, market risk still exists, and prices can go up or down.
Common Beginner Mistakes
❌ Trading without understanding
❌ Overtrading
❌ Chasing quick profits
❌ Ignoring risk
✅ Better approach:
- Learn first
- Start small
- Focus on long-term investing
Key Takeaways
- Trading requires Demat, Trading, and Bank accounts
- Orders are placed through brokers
- NSE and BSE execute trades
- Settlement happens on T+1
- Beginners should focus on delivery-based investing
What Should You Read Next?
You have now completed the Basics of the Indian Stock Market 🎉
Next, you can move to: