In India, to trade in stocks, u need to get a demat account (In most developed markets, Demat account is compulsory) These accounts are like bank accounts, the only diffence being that your bank account holds money, while a demat account holds Stocks. This makes sure that u dont need to keep the share certificates safely. There is no tension of lost certificates. Also it makes the business much faster with deliveries directly from one account to another in a matter of one or two days. Just 15 years back one single transaction could take as many as 10 days to complete.
You also need to get in touch with a broker in your locality. A broker is geneally a person whom you can trust and who could trust you. Otherwise, The broker would like to have some advance deposited with him before he does some transaction on your behalf. With technology, over the last 20 years the role of a broker has become much more confined. Earlier he used to find a buyer for a seller and vice-versa, now he just needs to sit in fornt of his computer and technology does the rest.
The role of the stock market has remained as important as it was 100 years back, except that the transactions can take place through the internet without the physical presence of the broker. They have become much more sophisticated with different kinds of trades, specially the futures and options and stock Borrowing(Stock borrowing is still not allowed in India while futures and options are allowed in a selected few stocks)
You just need to call your broker and ask him to make a transaction in a particular script on your behalf. One is required to pay a Brokerage(generally between 0.45 to 1%) to the broker depending on the volume of business that you give to the broker. This is mutually negotiated at the time a sharetrader enters the business.
I will post more about how the stocks are actually traded at a later date, otherwise one might lose interest in the subject.
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