Week-3 | How Stock Market Works? | Ways to Earn Money from Stock Market | Stock Market for Beginners

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When you buy a stock, the chronology
o Assume you buy one share of ABC Limited today, T day, for Rs. 1,000.
o As a result, when you do this, Rs. 1,000 is debited from your trading account on T day.
o Moreover, by the conclusion of T days, the broker you're trading with will provide you a contract note. This document contains information about all of the trades you performed that day.
o On T+1 day, the internal processing for the trade you completed on T day takes place. The share of ABC Limited purchased on T day is then credited to your demat account.
The timeline when you sell a stock
o Conversely, let’s assume you sell 1 share of ABC Limited at Rs. 1,000 today, that is, T day.
o The share, which you would have held in your demat account prior to this trade, is blocked to minimise the chances of default.
o Before T+1 day, the share is moved out of your account and given to the exchange.
o On T+1 day, you receive the sale proceeds of Rs. 1,000 in your trading account.
The stages involved in a share transfer
As seen in the preceding example, the process of transferring shares is divided into three stages: execution, clearing, and settlement.
Execution: During this step, a trader like you places a buy or sell order, and the stockbroker meets the order's conditions. This occurs on the T day.
Clearing takes place on the T+1 day. Third-party clearing houses determine the amount of money that must be paid to the selling and the number of shares that must be transferred to the buyer.
Settlement: On the T+1 day, shares are credited to the buyer's demat account and money is deposited into the seller's trading account during the settlement phase.
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