Have you ever wondered what happens behind the screen when you buy or sell a share? If you’re exploring the world of investing or are planning to join a share market course in Nagpur, understanding how the stock market works—from trade to settlement—is essential. This blog by Stock Market Vidya, a trusted share market training institute in Nagpur run by Mr. Prashant Sarode, will walk you through the entire process in simple language.
Introduction: What Is a Stock Market?
The stock market is a place where buyers and sellers meet to exchange shares of publicly listed companies. It operates on a digital platform where investors, traders, brokers, and regulators interact to ensure smooth and transparent transactions.
Just like a vegetable market has rules and intermediaries, the stock market has regulations and participants who make sure every transaction is completed in an orderly and secure manner.
Participants in the Stock Market
Before we dive into the trade and settlement process, let’s understand the key players in the ecosystem:
1. Investors/Traders
These are individuals or institutions that buy and sell shares. Investors focus on long-term gains while traders aim for short-term profits.
2. Stock Exchanges (NSE, BSE)
These are marketplaces where stocks are listed and traded. In India, the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are the two major ones.
3. SEBI (Securities and Exchange Board of India)
SEBI is the regulatory authority that ensures transparency and fairness in the market.
4. Brokers and Sub-brokers
You can’t buy shares directly from the exchange. Brokers are intermediaries who are authorised to place trades on your behalf.
5. Depositories (NSDL and CDSL)
Depositories hold your shares in a digital format, just like banks hold your money.
6. Clearing Corporations
These entities handle the actual clearing and settlement of transactions after a trade is executed.
If you are attending a stock market course or planning to start your journey, learning about these participants is your first step.
Step-by-Step Journey: From Trade to Settlement
Now let’s go deep into how the stock market works once you decide to buy or sell a share.
1. Placing the Trade Order
When you decide to buy or sell a share, you log into your trading account linked with your demat account and place an order through your broker’s platform.
For example, if you want to buy 100 shares of Reliance at ₹2,500 each, you enter this information and submit the order.
There are two main types of orders:
- Market Order: Buy/sell at the best available price.
- Limit Order: Buy/sell at a specific price or better.
Pro Tip: In our share market classes, we explain how to use these order types strategically.
2. Order Transmission to the Exchange
Once your order is placed, it’s transmitted electronically to the stock exchange (like NSE or BSE). The exchange’s system matches your order with the best available counter-order.
- If someone wants to sell the exact quantity of Reliance shares at ₹2,500, your order will be matched instantly.
This process is known as order matching, and it happens within milliseconds.
3. Trade Execution
The moment your buy order matches with a sell order (or vice versa), the trade is said to be executed.
Once the trade is executed:
- You get a trade confirmation.
- The stock exchange records the transaction.
- Both buyer and seller are notified.
Still, you don’t officially own the shares yet! Ownership will only be transferred after settlement, which is the next step.
4. Trade Confirmation and Contract Note
After the trade is executed:
- Your broker sends you a contract note.
- This document shows all trade details: price, quantity, brokerage, and applicable charges.
This is proof of your transaction and is vital for tax and record-keeping purposes.
If you’re serious about trading, a good stock market training program will show you how to read and understand your contract notes properly.
5. Clearing: The Process Between Trade and Settlement
Here, the clearing corporation steps in. Its job is to ensure that:
- The buyer pays the money.
- The seller delivers the shares.
This process involves the collection of funds and shares from respective parties.
Think of it like a mediator that ensures everyone plays fair.
6. Settlement: Ownership Is Transferred
In India, the stock market follows a T+1 settlement cycle, which means:
- If you buy a share on Monday (T), it will be credited to your demat account on Tuesday (T+1).
- If you sell shares, the money will be credited to your bank account the next day.
During settlement:
- The seller’s demat account is debited.
- The buyer’s demat account is credited.
You now officially own the share and can hold or sell it later.
7. Post-Trade: What You Must Know
After the trade and settlement are completed:
- Monitor your demat account to verify credit or debit of shares.
- Check your bank account for fund transfers.
- Maintain proper records for taxation purposes.
This is where share market training helps. At Stock Market Vidya, we teach how to manage post-trade actions confidently.
Common Terms You Must Know
Here are some essential terms that every investor or trader must understand:
- Demat Account – Holds your shares electronically.
- Trading Account – Interface to place buy/sell orders.
- Brokerage – Commission charged by your broker.
- STT (Securities Transaction Tax) – Tax levied on trades.
- Intraday vs Delivery – Buying and selling on the same day vs holding shares for longer.
If you’re joining a share market course near me, make sure they cover these practical topics in depth.
Why Understanding Trade to Settlement Matters?
Understanding the trade-to-settlement process helps you:
- Trade with confidence.
- Avoid unnecessary mistakes.
- Stay compliant with SEBI regulations.
- Plan better for short-term and long-term investments.
At Stock Market Vidya Nagpur, our students not only learn theory but also practice live trades to understand these stages in real-time.
How a Share Market Course in Nagpur Can Help
Whether you are a beginner or someone with experience, attending a professional share market course in Nagpur can help you:
- Understand technicalities of the market.
- Use broker platforms effectively.
- Learn trading psychology.
- Manage risk and capital.
- Explore different strategies.
Under the mentorship of Mr. Prashant Sarode, you get practical insights that go beyond books. You learn how to analyze real-time market data, read charts, and most importantly—act smartly in a volatile market.
Voice of a Learner: Real-World Impact
“Before joining Stock Market Vidya, I used to invest blindly. After attending their stock market training, I now understand what happens after I click the ‘Buy’ button. This knowledge gives me confidence and control.”
– Shruti, Nagpur
Final Thoughts
The stock market may seem complex at first, but once you understand how trades are executed and settled, it becomes a system of logic and structure. From clicking the “Buy” button to receiving shares in your demat account—it’s a process that’s fast, secure, and well-regulated.
If you’re someone who wants to dive deeper and learn the process step-by-step with practical examples, enrolling in a share market course in Nagpur at Stock Market Vidya is a smart move.
Contact for Admission & Enquiries
Stock Market Vidya – Share Market Training Institute, Nagpur
Run by: Mr. Prashant Sarode
Mobile: 9822718163 / 8421893845
Website: www.stockmarketvidya.com
