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How the stock market works, exchange, broker, order matching — a complete guide for beginners.
Published by The Retail Trader · AUG 07, 2026 · Features
How the stock market works, exchange, broker, order matching — a complete guide for beginners.
Simple Explanation:
• A company issues shares (through an IPO)
• You buy shares (through a broker)
• The price rises (through demand/supply)
• You sell (book profit)
Keep these six points in mind:
• Company — Issues shares
• Stock Exchange — Trading platform (NSE/BSE)
• Broker — Your intermediary (Zerodha/Groww)
• SEBI — Regulator (protects the market)
• Depository — Stores shares (CDSL/NSDL)
• Investor — You (buy/sell)
Keep these points in mind:
• You place an order (buy Reliance @ ₹2,500)
• ↓
• The broker sends the order to the exchange (NSE)
• ↓
• The exchange matching engine finds a seller
• ↓
• Matched → Trade executed
• ↓
• Shares are credited in the depository (CDSL)
• ↓
• T+1 settlement (money/shares next day)
More people want to buy, fewer want to sell → the price rises.
More people want to sell, fewer want to buy → the price falls.
Example:
• Reliance quarterly results came in good → Demand rose → Price from ₹2,400 to ₹2,600
• Bad results → Supply rose → Price from ₹2,400 to ₹2,200
Keep these four points in mind:
• Pre-open — Time: 9:00-9:15 AM, What Happens: Order collection, opening price
• Normal — Time: 9:15 AM-3:30 PM, What Happens: Regular trading
• Closing — Time: 3:30-3:40 PM, What Happens: Closing price calculation
• Post-close — Time: 3:40-4:00 PM, What Happens: AMO orders accepted
Keep these five points in mind:
• Market — Buy/sell at the current price
• Limit — Buy/sell at a specific price
• SL (Stop Loss) — Order at a trigger price
• AMO — After market hours order
• GTT — Good Till Triggered (long-term)
Keep these points in mind:
• 📌 HOW THE STOCK MARKET WORKS
• ECOSYSTEM:
• 📊 Company → Shares issue
• 📊 Exchange → Trading platform (NSE/BSE)
• 📊 Broker → Your intermediary
• 📊 SEBI → Regulator
• 📊 Depository → Shares storage (CDSL/NSDL)
• ORDER FLOW:
• 📊 You order → Broker → Exchange → Match → Execute → Settlement
• PRICE MOVEMENT:
• 📊 Demand > Supply → Price UP
• 📊 Supply > Demand → Price DOWN
• TIMINGS:
• 📊 Pre-open: 9:00-9:15 AM
• 📊 Normal: 9:15 AM-3:30 PM
• 📊 Settlement: T+1
• ORDER TYPES:
• 📊 Market — Current price
• 📊 Limit — Specific price
• 📊 SL — Trigger price
• 📊 AMO — After market hours
Keep these points in mind:
• What Is the Share Market? | Demat Account Guide | Trading Account Guide
The Retail Trader — educational market analysis. Not investment advice.
This article is for educational purposes only — no buy or sell recommendation, no claim of guaranteed returns, and no advisory. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or the official source.