Basics of Share Market: Definition, History, Types, Benefits and Best Trading Apps

A man and woman analyzing a stock market graph with a magnifying glass and laptop, possibly considering investing in the stock market.

Nowadays, the success of any person is judged by how much money he earns. To achieve this financial success, people keep trying to earn more money from different sources at their level.

You can also call this as ‘Side Income Source’.

Everyone tries to find a side income source but only a few people are able to find it who are smart or who really want to become a successful person.

Side income source can be anything like freelancing, lending on interest, doing part time job in a hotel or restaurant, doing part time photography etc.

These income sources are good but you cannot earn much money from them in minimum time. For this you need a source where you can earn maximum money in less time by giving minimum time.

This sounds good, doesn’t it?

I think there is probably a source which gives maximum output in minimum time.

The name of that source is Share Market or Stock Market.

It is said that share market is an ocean of money. You can make as much money as you want from this ocean as long as you understand it well.

If you do not know anything about the share market and want to earn some money from the share market, then it is very important for you to have basic knowledge of it before earning money.

If you want to get basic knowledge of share market then you do not need to go anywhere else because this article is for you.

So, Let’s Start!

What is share market?

Well, share market is also called by other names which are stock market and equity market.

These three names have the same meaning and that is that share market is a market where any person can buy or sell shares of any public company.

Here buying shares of a company means that the person buys some percentage ownership of that company. The price of these shares of companies is determined on the basis of demand and supply.

In this way, the person becomes the owner of some percentage of that company and as much profit as the company makes, that person also gets the same profit as per the percentage ownership of the person in the company.

Now we will know when and how the share market started. Let’s go!

Also Read:-  What is FD (Fixed Deposit) and RD (Recurring Deposit)?

History of share market

Modern stock trading began in 1602 when the Dutch East India Company invited the public to buy equity shares of its business. But with this invitation there was a problem that how to manage so many stocks and their records.

In this way, the world’s first stock exchange was started for valuation and regulation of stocks, which was named ‘Amsterdam Stock Exchange’.

Apart from the Dutch East India Company, all the other European countries or those who came to do business in the eastern areas also started following the concept of stock market. In this way these European countries moulded business into a new shape.

But at this time all these stocks were dealt in coffee shops of London and it was not easy to deal with them.

Now in London also there was a need for a market from where stocks could be bought or sold.

Therefore, in the year 1773, the London Stock Exchange was started and exactly 19 years later, the world’s largest stock exchange, the New York Stock Exchange, was started.

Ever since the New York Stock Exchange was started, it has remained the largest stock exchange in the world.

In India, the Native Share and Stock Brokers Association was first established in the year 1875, which later became famous by the name of Bombay Stock Exchange.

Similarly, in 1894 AD, some investors from Gujarat together started the Ahmedabad Stock Exchange.

Due to Calcutta being the trade centre of India, Calcutta Stock Exchange was formed in 1908 and then Madras Stock Exchange in 1937.

Types of share market

There are two types of share market that are following:

1.    Primary Share Market:

Primary share market is a gateway for any company to enter the share market. In this primary market, any company that wants to raise funds for its business enters it and launches its IPO (Initial Public Offering).

Along with launching IPO, the company offers investors to buy shares of the company and in this way the company raises funds to start or run its business.

2.    Secondary Share Market:

Secondary share market is the stage after the launch of the company’s IPO, in which all the shares of the company are traded in the market. In this market, the company which issues its shares, shares of the company are bought and sold among many investors without the intervention of the company.

The prices of these shares of the company are determined on basis of demand and supply in the market and their prices can change at any time. This share market is important for those investors who get profit or loss by buying and selling shares of the company.

What can we trade in share market?

Do you know that the share market allows trading in a wide variety of trades? If you do not know then let us know which are those trades through which we can trade in the stock market.

Also Read:-  Everything You Need to Know About Initial Public Offering (IPO)

1.    Shares:

Shares are an entity of equity ownership in a company. Any company which is listed in the share market provides its shares to the investors and the investors who buy the shares get the profit or loss arising from it. The profit or loss from any share depends on the profit or loss of the company in which the share is held.

2.    Bonds:

Bonds are a type of loan through which the company starts its long-term and profitable projects. According to its capital requirement, the company decides the value of the bonds and issues them to the public. Any investor who buys those bonds receives timely interest from the company on his invested money. In a way, bonds can be seen as a source of fixed income in which after the time-period of the Bonds ends, investors get the fixed interest on them along with the money invested.

3.    Mutual Funds:

Mutual funds are funds that are managed by professionals appointed by the issuing asset management company. First of all, money is collected from many investors in mutual funds and then the people who manage the mutual funds invest the collected money in different places with their experience. There are different types of mutual funds in the share market based on return, risk and time in which one can invest such as equity, debt and hybrid etc.

4.    Derivatives:

A derivative is a type of trading whose value is based on the value of its underlying asset. As the value of the underlying asset increases or decreases, the value of its derivatives also increases or decreases accordingly. Financial derivatives in the stock market have stocks, indices, currencies and commodities as underlying assets.

Benefits of investing in share market

Why should anyone invest in the stock market? To know the answer to this question, you have to understand the benefits of investing in the stock market, so let’s discuss.

1.    Easy to invest:

Share market is known as easy investment where any person can invest his money within minutes and can also withdraw it within minutes. That’s why stocks are also called liquid assets.

2.    Higher returns in minimum time:

Among all the investment choices, share market is the only investment option which can give you higher returns in the shortest time. This is because the share market keeps going up and down every moment, due to which you can get so much returns within a day that you cannot get the same returns by investing the same amount of money in the same time-period anywhere else.

3.    Dividend income:

Dividend income is a type of reward that is given by a company to its investors. This is a source of extra income for investors which they receive annually from the company. Dividend income is not affected by increase or decrease in the value of the company’s stocks, it is received at its own time.

Also Read:-  Everything That You Need To Know About Mutual Funds

4.    Investment protection by SEBI:

SEBI (Stock Exchange Board of India) is responsible for reducing the risk of fraudulent activities by any company to any investor in India. SEBI (Stock Exchange Board of India) is responsible for reducing the risk of fraudulent activities by any company to any investor in India. SEBI mainly regulates stock exchanges and their development besides protecting the rights of investors.

If after reading this article you want to do trading or investment and want to know the best app for investing in share market, then you do not need to go anywhere else because after this you will know which are the best apps for investing in share market.

Best applications for trading and investment in stock market

1.    Upstox Pro:

  • Best application for Intraday and F&O trading
  • Account opening charges: Nil(maintenance charges INR 300 after 1st year)
  • Forbes advisor rating: 4.0
  • Brokerage charges: 2.5%  of completed per order or INR 20 one of the two is lower
  • Available for Android and iOS devices

2.    Groww:

  • Best application for beginners
  • Account opening charges: Nil
  • Forbes advisor rating: 3.5
  • Brokerage charges: INR 20 on completed per order
  • Available for Android and iOS devices

3.    Paytm Money:

  • Best application for both investment and trading
  • Account opening charges: Nil(maintenance fee INR 300 after 1st year)
  • Forbes advisor rating: 3.5
  • Brokerage charges: 0.20% of gross revenue
  • Available for Android and iOS devices

4.    AngelOne:

  • Best application for both investment and trading
  • Account opening charges: Nil
  • Forbes advisor rating: 3.9
  • Brokerage charges: Zero brokerage charge for first 30 days on intraday, F&O and commodities after 30 days INR 20 brokerage charge
  • Available for Android and iOS devices

5.    Zerodha Kite:

  • Best application for overall trading experience
  • Account opening charges: INR 200 for online account open and INR 500 for offline account open
  • Forbes advisor rating: 4.5
  • Brokerage charges: Zero brokerage
  • Available for both Android and iOS devices

6.    5Paisa:

  • Best application for retail trading
  • Account opening charges: Nil(After 1st year maintenance fee INR 300)
  • Forbes advisor rating: 4.0
  • Brokerage charges: 2.5% or INR 20 on per completed order one of the two is lower
  • Available for both Android and iOS devices

Disclaimer

This article has been written for the purpose of providing information only. This website does not encourage anyone to trade or invest in the share market. Do not mistake the information given in this article for legal, tax, investment, financial, professional or any other advice. Investing in share market is subject to share market risks, read the relevant documents carefully before making any investment.

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