introduce beginners to the attractive world of trading. Trading can be a very
exciting and useful endeavor and the main attraction for many people. You can
do it from almost anywhere. The main reason why people trade is to make money,
in simple terms, we buy a financial product and then sell it later for a higher
price. The product can be stock of a company, a futures contract or even a
foreign currency. A lot of people fail to make money, so make sure you understand
about why traders fail.
partial owner of the company and different types of shares have different
rights coupled with them. If you are able to sell off your share at a price
higher than your buying price, you make a profit but you also run the risk of
incurring a loss if the share price falls. The business you invested in makes
profit and they provide you part of it as dividend. In the share market you are
an unidentified player and many have made a reasonable profit. There is no
unique principle to ensure consistent gain but before you get into this market
you should know the basics of stock trading.
Stocks Trading mean?
action with the arrival of stock markets and these markets came into existence
when companies decided to raise money with the help of selling their stocks.
Every day lots of people get involved into stock trading and many people are
planning to trade. Stock trading as well as day trading and other types of
financial activities can seem very complex and even confusing but it’s not
actually so. Before you start trading it is essential to know its benefits and
is referred as stock trading in the financial market. You have to approach a
broker in order to trade. You can trade either electronically or on the
exchange floor. Exchange floor scene must be familiar to you. Here your broker
arranges for your shares to be ordered. The floor clerk locates the floor
trader from whom the shares can be bought. Once the price is agreed upon, the
deal is finalized. In online trading your broker will connect to the exchange
network and search for a buyer or seller according to your order.
in the terminology of the financial markets. How a system that can accommodate
one billion shares trading in a single day works is a mystery to most people.
No doubt, our financial markets are marvels of technological efficiency. They
will handle your order for 100 shares of “BHEL” with the same care and
documentation as the order of 100,000 shares from another person.
Trader you don’t need to know all of the technical details of buying and
selling stocks; however it is important to have a basic understanding of how
the markets work.
Methods of Trading
which trading can be done they are:
is the image most people have in their mind. Thanks to television and the
movies of how the market works. When the market is open, you see hundreds of
people rushing about shouting and gesturing to one another, talking on phones,
watching monitors, and entering data into terminals. In Exchange floor trading
traders will directly go to the market and trade with the help of a human
enormous computer networks to match buyers and sellers, rather than human
brokers. While this system lacks the romantic and exciting images of the BSE
floor, it is efficient and fast. Many large institutional traders, such as
pension funds, mutual funds, and so forth, prefer this method of trading.
involves buying shares/stock for long term capital growth. Most people, even
those who have never purchased shares before, are familiar with this
traditional approach to the market. For many years a ‘buy and hold’ approach
has been the thumb rule for many investors in the stock market. After
recognizing a potential solid large company, shares would be purchased and
locked away in the shelf. The ownership was similar to a marriage in that it
was undertaken for ‘better or worse’. Through good and bad times, an investor
would be secure in the knowledge that the company would pay periodic dividends
and that over many years, would return steady capital growth.
involves buying and selling more regularly in search of small and consistent
financial gains. People have been trading for many years and those who are
successful generally enjoy all of the advantages. Trading has a greater
potential for reward than investing but with that extra potential for reward is
greater risk. Those who trade well have been well educated and prepared. It is
very are that somebody start trading and make money from day one. Often you
will hear the saying ‘Only Educated Traders Survive’. It means if you want to
be a successful trader you should be well aware of the market and stocks.
IndianMoney.com will support you in being an expert in this area.
to be answered before deciding to buy a Stock
to be answered before deciding on which stock to buy.
should be aware of your limits and remember not to exceed them. Share market
involves lot of risk; risk taking could either lead to fortunate gains or to
huge loss it can lead you to bankruptcy also. Concentrate on the following
factors before investing.
than you can actually afford.
not blindly depend upon your broker.
keep yourself abreast of the market swings.
earning power, gives you partial ownership of a company and the freedom to buy
or sell at any time. But if you are a beginner in stock trading you need to
play safe and equip yourself with a lot of information. IndianMoney.com will provide all such information for you. Unless
you are an experienced player you should invest only after surveying all the
substitutes and never go beyond your risk tolerance.
sometimes borrow money to practice their trade which is known as margin
trading. There is no cost to day trader for the margin benefit since margin
interests are typically only charged on overnight balances. It can be either
extremely profitable or extremely unprofitable because of the nature of
financial leverage and the rapid returns that are possible. High risk profile
traders can generate either huge percentage of returns or huge percentage of
losses in their cash. Thus day traders are sometimes portrayed as ‘gamblers’ by
other investors because of the high profits or losses born by them.
trading is a good way to earn money with a bit of gambling. But you need to
have some idea about day trading strategies so that you get good profits out of
it. However once you get into day trading, then you have to devote your whole
life into the stock market.
ups and downs of the market
Indian stock market, you need to be fully prepared for ups and downs in the
market. The value of the stock may rise or fall down in a single day. So each
trader makes his or her own strategy in order to earn maximum results. There
are traders who do their trading from their computers but this does not mean
that trading can be done only through the computers. There are some traders who
make the use of their phones. Whichever method you utilize, but the important
thing which you have to do is to make a good research. You should be able to
study the whole market very carefully so that you do not lose any cash
investing in the stock market.
market about NSE, BSE, etc, you should also take some precautionary measures.
You must always avoid worthless rumors about the companies by people who do not
know much about them. This people just make you confused. So, you need to avoid
this type of people. It is always better to buy stocks when they are available
in low price and then sell them at a higher price in the market. There is a
limit on the gains from a single share in the stock market day trading. So, you
should always try to buy and change stocks in regular intervals.
Techniques for Individuals
keep the following things in mind to succeed in day trading
help you in being a good Intraday Trader
to become a successful Intraday Trader.
Start with a realistic
goal in mind.
decision whether you want to become a trader or seek an employment. Always keep
a realistic goal in your mind about what you want to achieve from the stock
market. That will help you to achieve the goals.
Never make the mistake
of believing that you have become the master.
market, learning never ends here. One should not feel he/she is an expert if
they make money in 5-6 trades without any loss. One should keep himself open
for new learning and appoint consultants for him.
Prepare a trading plan.
historical data and then stick to it. Don’t keep fine tuning the plan, it means
never change plan. Start with the smallest amount of capital that you can
effectively trade with. Initially start with a small amount and carefully enter
the stock market.
Make a commitment
a few successes in stock market and start increasing your capital, that is a
sure sign that you are not in control; the market is controlling you which mean
you are on the path of getting trapped in the stock market. IndianMoney.com suggests you to monitor your performance of winning
or losing on a weekly basis, Do review each trade and assess the performance.
Take a break
losing money in stock market. You should take a break after fix intervals let’s
say after 4 months, pause for a 3-4 days. Again evaluate your performance and
identify any gaps in your knowledge that needs additional works.
Take Professional Help
problem in your trading plan, don’t hesitate to consult a financial analyst.
Find an experienced and performance oriented professional who is providing tips
to their clients. Take advantage of their research and knowledge.
Long term strategy
your performance and decide whether you are ready to commit more capital to the
stock market or not. But we assure you with professional help and your own
knowledge you will surely be a winner in Indian or any stock market.
Market Advice for a Trader:
market advice for a Trader;
chase a stock.
when markets are in the grip of panic.
buy fundamentally strong stocks, which are undervalued.
stocks grown in top line and bottom line over the past years.
in companies with proven management.
Ratio and Growth in earnings per share are the key.
for the dividend paying record.
in stocks for sure returns.
the high yielding asset class over the past.
property of any asset class is to grow.
everyone is selling and sell when everyone buys.
amount each month.