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Volatility Indicates harvesting away of liquidity from the stock markets, leading to a bear market. VOLATILE the term means TO EVAPORATE or gone away. So any market where obvious taking back of investment happens is a Volatile Stock Market.
Nifty And Volatility Index:
Nifty has introduced a special index to represent it in quantitative manner called as Volatility Index. Principle behind evaluating it is Number Of Retail Investors In The Market. The more the retail investors the more will be the volatility index value.
High Volatility Indicates Disinvestments:
Higher volatility index values above 50 points and strictly continuing above it for some trading sessions indicate short term steep fall in stock markets. Above 60 levels are conscious signals to start disinvestments from stock markets.
Anyhow, volatility is very considerable obligate factor effecting the belief of investors in financial markets, as its ultimate consequence is a bear phase.
Showing posts with label Stock market terms. Show all posts
Showing posts with label Stock market terms. Show all posts
Dividends will allotted for shares and funds
The Profit Gained by the companies generally Shares equally to their Promoters and Stakeholders in the form of Dividend.
By Investment Companies Or Mutual Fund Houses:
Listed stock market companies declare dividend on Face Value of their shares, while mutual fund dividend depends on both profit achieved by the mutual fund house and dividend delivered by their investment companies.
Declaring A Dividend:
A good fundamental company always shares gained profits equally to investors as Regular dividends. Dividends Are The Actual Earnings On Shares. But a company may or may not provide all its profits as dividend. Remained profits of companies are useful for some other Expansion Plans, Takeovers, or Other Miscellaneous expenditures.
Investment For Dividend:
Point Investment Never Work for dividend gaining, as no one knows when respective companies announce a Dividend. Unfortunately in Indian stock markets many Best Dividend Stock companies are Inactive and repellent shares for intra-day and short-term traders.
There are no ruled out shares named for regular dividends, but stock like CASTROL OIL is best example of Dividend Yield Stocks.
For shares dividend adds directly to Trading or Demat Accounts. For unit holders, based on fund either it automatically used to buy units or obtains as a cheque to your postal address.
By Investment Companies Or Mutual Fund Houses:
Listed stock market companies declare dividend on Face Value of their shares, while mutual fund dividend depends on both profit achieved by the mutual fund house and dividend delivered by their investment companies.
Declaring A Dividend:
A good fundamental company always shares gained profits equally to investors as Regular dividends. Dividends Are The Actual Earnings On Shares. But a company may or may not provide all its profits as dividend. Remained profits of companies are useful for some other Expansion Plans, Takeovers, or Other Miscellaneous expenditures.
Investment For Dividend:
Point Investment Never Work for dividend gaining, as no one knows when respective companies announce a Dividend. Unfortunately in Indian stock markets many Best Dividend Stock companies are Inactive and repellent shares for intra-day and short-term traders.
There are no ruled out shares named for regular dividends, but stock like CASTROL OIL is best example of Dividend Yield Stocks.
For shares dividend adds directly to Trading or Demat Accounts. For unit holders, based on fund either it automatically used to buy units or obtains as a cheque to your postal address.
Labels:
Dividends for shares,
Stock market terms
Stockbroker, a Middleman b/w exchange and people
A stock broker is a middleman between the exchanges and investors.
Broker provides the flexibility in deals of investors with exchanges.
Below are some entry questions over brokers:-
Is it not possible to deal in stock markets, without a broker?
It’s possible, but risky. Unless a broker you need a registration certificate from SEBI. Suitable bank deals are essential for cash deals with exchange. We need to trade under complicated stock exchanges trading platform, which cannot ascertain too many options as your brokerage. Or create a suitable platform with own servers, technologies.
Why to face all these risks? Its better to pay a small brokerage fee and enjoy easy trading.
Is my money safe on transactions with broker?
Mis-use of money by brokers, recorded cases is very few on this aspect. Check your brokers SEBI registration certificate it’s your ‘money safety certificate’.
Many brokerages are limiting transactions between trading account and bank account only. So there are no chances to mis-use your trading account.
Now brokerage charges, facilities offered are the ensuring factors effecting selection of brokers, as safety is not an issue. Many brokerages are now trusted corporate firms.
Broker provides the flexibility in deals of investors with exchanges.
Below are some entry questions over brokers:-
Is it not possible to deal in stock markets, without a broker?
It’s possible, but risky. Unless a broker you need a registration certificate from SEBI. Suitable bank deals are essential for cash deals with exchange. We need to trade under complicated stock exchanges trading platform, which cannot ascertain too many options as your brokerage. Or create a suitable platform with own servers, technologies.
Why to face all these risks? Its better to pay a small brokerage fee and enjoy easy trading.
Is my money safe on transactions with broker?
Mis-use of money by brokers, recorded cases is very few on this aspect. Check your brokers SEBI registration certificate it’s your ‘money safety certificate’.
Many brokerages are limiting transactions between trading account and bank account only. So there are no chances to mis-use your trading account.
Now brokerage charges, facilities offered are the ensuring factors effecting selection of brokers, as safety is not an issue. Many brokerages are now trusted corporate firms.
Labels:
Stock broker,
Stock market terms
what is Margin in trading, its uses, risks associated
Margin is a credit taken from our brokerage house for investment in stock markets by paying a little interest on it. Generally brokerages allow us to buy more stocks than our actual money, the extra money they provided should be returned along with additional interest. Brokerages use your actual money as surety for their credit.
Here is a simple example,
Consider a stock ‘X’ trading at Rs.100/-, if you have RS.10000/- in hand, got 10 stocks. But you are in great hope that stock will gain good profits. Then, how to buy more than 10 stocks with same money. Here margin plays role. Margin amount should be returned along with interest, brokerage will have no involvement over your profits or losses made.
Taking original investment Rs.10000/- as surety, your brokerage will give another Rs.10000/- as margin (amount of margin varies for different brokerages). Pretty!! 20 stocks with only 10000. Brokerages generally give large margin for intraday traders, and should be returned on the same day along with the interest.
If stocks gain profits, you get more than original profits. Unfortunately if end in losses, you get intense losses than original. Interest rate is addition in either of cases.
How it happens is:
-Consider an investor who taken margin, against his Rs.10000/- to buy 20 stocks each of value Rs.1000/-
1.Suppose stock price rises from 1000 to 1200, Rs.200 is profit on each share.
2.Then on 20 stocks, 20*200 = 4000
3.Here Rs.4000/- is profit.
Investor needs to pay back margin amount along with little interest. (Interest rate varies for different brokerages)
If the investor not utilized any margin he will got only 10 stocks and so profit will be only Rs.2000/-
All this is only one side of coin, ‘as like you got more profits if stock gains, also got more losses if stock price falls.
Suppose, if stock reached to Rs.800/-.
Loss without taking margin = Rs.2000/-
Loss with margin = Rs.4000/-
So if you taken margin, now your net balance will be = 10000-4000 = Rs.6000/-
If the stock price goes on decreasing, your net balance will decline at rapid rate, then the brokerage thinks can the investor can able to pay back our margin amount?
If price of stock reaches a threshold decline level, brokerage sells off all your shares (as they fear of there credit amount), deduct their original margin and interest.
At last you remained with penny balance in your account and no holding shares.
Here, margin-less trader is winner, as he had no fear of selling off by brokerage, he stays with his stocks in account and enjoy the recovery of stock if happens.
So, even though margin is a very useful tool, only utilizing it very careful with follow of a risk less strategy will be beneficial. Don’t take so large available margin, as any mis-happen make you to remain with empty balance.
Explanation Upper, Bottom stock market Circuits
To mean a sudden and huge change in either stock price/index, term circuit is used. While the term upper circuit denotes a good profit is gained, bottomed-out circuit denotes a loosed gallery.
Mainly the news makes the stock markets or specific companies to make and break through the circuits. Very good news makes the markets to hugely rally and vice versa.
Some examples, of the circuit formations are:
- When the sub prime crisis beaked in the January of 2008, the stock markets recorded a huge fall and recorded bottom circuits.
- After the announcement of Satyam scam, the company stock hugely falls and touches bottom circuits.
- After the win of U.P.A government with the consistent majority, the stock markets made a huge rally and touched upper circuits.
Sometimes rumors also make the markets or stocks to make circuits.
There are certain regulations over these heavy price fluctuations occurring in stock markets. Trading would be interrupted for some time by exchanges when primary circuits are touched. And trading will suspended for whole day if markets or stock prices again touched final circuits. These circuits will be fixed at certain levels huge percentage of raise or fall.
Stoppage of trading at upper circuit a mandatory is to prevent mis-use of stock markets. While interruption at lower circuits helps to protect the investors, investment from heavy losses.
These circuits had of very importance for day traders. They may generate profit rain, as well as huge losses.
Generally, on esurience of a good/bad news stocks with low float value had always risk of breaking circuits. Even small buying or selling by investors will reflect in large changes in stock prices for these stocks.
Recommendation: Book profits whenever your stock achieved a good amount of profit never wait for greedy returns, as touching upper circuit many times followed by fall. If your stock ended in bottom circuit, hold it for atleast two further days, If that stock is fundamentally strong tag it in your long-term portfolio or consider averaging.
Mainly the news makes the stock markets or specific companies to make and break through the circuits. Very good news makes the markets to hugely rally and vice versa.
Some examples, of the circuit formations are:
- When the sub prime crisis beaked in the January of 2008, the stock markets recorded a huge fall and recorded bottom circuits.
- After the announcement of Satyam scam, the company stock hugely falls and touches bottom circuits.
- After the win of U.P.A government with the consistent majority, the stock markets made a huge rally and touched upper circuits.
Sometimes rumors also make the markets or stocks to make circuits.
There are certain regulations over these heavy price fluctuations occurring in stock markets. Trading would be interrupted for some time by exchanges when primary circuits are touched. And trading will suspended for whole day if markets or stock prices again touched final circuits. These circuits will be fixed at certain levels huge percentage of raise or fall.
Stoppage of trading at upper circuit a mandatory is to prevent mis-use of stock markets. While interruption at lower circuits helps to protect the investors, investment from heavy losses.
These circuits had of very importance for day traders. They may generate profit rain, as well as huge losses.
Generally, on esurience of a good/bad news stocks with low float value had always risk of breaking circuits. Even small buying or selling by investors will reflect in large changes in stock prices for these stocks.
Recommendation: Book profits whenever your stock achieved a good amount of profit never wait for greedy returns, as touching upper circuit many times followed by fall. If your stock ended in bottom circuit, hold it for atleast two further days, If that stock is fundamentally strong tag it in your long-term portfolio or consider averaging.
Labels:
Stock market circuits,
Stock market terms
Hedging Technique to protect our stock investments
Hedge means protection. Hedging in investment terminology means ‘A technique followed to protect the investment against the risk’ involved in stock markets.
Stock market investments are in general risky, it turns even more risky when we invest in high risk shares, derivatives etc. Hence it would be better to follow a suitable hedging technique, based on our category of risk. In general hedging includes buying other types of shares or other securities (like derivatives, gold) to protect from probable risk in our actual investment.
Below are some examples of hedging:-
-Small cap companies have high growth opportunity and when succeeded they make investors huge profits. At the same time small caps may not have strong fundamentals and compromise of high risk. So, some blue chip stocks like reliance, infosys, tata group companies etc should be bought along with small caps.
-Pharma, health care, bank and PSU stocks are hedges for high-risk reality, IT, and related service sector stocks.
-‘Options’ of derivatives segment can be used to hedge against risk of stock market fall.
-Dividend yield stocks are best for constant returns, can be hedged against non-dividend yielding active stocks.
Even though hedging technique is used to insurance our main investments; it should be carefully done, such that ‘hedging should not neutralize your profits’.
For example, consider two pharma companies, one is of manufacturing synthetic cancer treating drugs and other company which manufactures natural cancer treating agents. Now buying shares of both companies is a good example of hedging. Suppose, if popularity of synthetic agents is increasing, synthetic drug company profits and ultimately its stock prices will fall. But now we are hedged with other natural drugs company, its profits raises and risk from first company will be covered. But here some factors are considerable:
-The net profit earned by you is almost neutral.
-Only rise in capital of sector i.e. cancer treating drugs here, only will give you good profits.
So always use ‘hedging technique for shares with the future scope of the sector rather than companies, especially if both are operating in same compotator business.
In my opinion, the best hedging tools are Derivatives (F&O) and active stocks.
Because if your main investment is one lakh, your hedging investment should be pretty less than 1 lakh, but can protect all your 1lakh. How to achieve this? Simple buying some very active stocks, options, or futures. For example, you invested 1 lakh total as long-term portfolio; buy some options or futures that profitable if stock markets fall (worth atleast 10,000). If really markets hugely fall your 1 lakh will become 50,000. than your options or futures hugely gains and may become 50,000, based on intensity of fall. so, here you successfully protected entire 1 lakh with only 10,000.
Labels:
General stock guidance,
Hedging,
Stock market terms
Hedging Technique to protect our stock investments
Hedge means protection। Hedging in investment terminology means ‘A technique followed to protect the investment against the risk’ involved in stock markets।
Stock market investments are in general risky, it turns even more risky when we invest in high risk shares, derivatives etc। Hence it would be better to follow a suitable hedging technique, based on our category of risk। In general hedging includes buying other types of shares or other securities (like derivatives, gold) to protect from probable risk in our actual investment.
Below are some examples of हेद्गिंग:
Small cap companies have high growth opportunity and when succeeded they make investors huge profits. At the same time small caps may not have strong fundamentals and compromise of high risk. So, some blue chip stocks like reliance, infosys, tata group companies etc should be bought along with small caps.
-Pharma, health care, bank and PSU stocks are hedges for high-risk reality, IT, and related service sector stocks.
-‘Options’ of derivatives segment can be used to hedge against risk of stock market fall.
-Dividend yield stocks are best for constant returns, can be hedged against non-dividend yielding active stocks.
Even though hedging technique is used to insurance our main investments; it should be carefully done, such that ‘hedging should not neutralize your profits’.
For example, consider two pharma companies, one is of manufacturing synthetic cancer treating drugs and other company which manufactures natural cancer treating agents. Now buying shares of both companies is a good example of hedging. Suppose, if popularity of synthetic agents is increasing, synthetic drug company profits and ultimately its stock prices will fall. But now we are hedged with other natural drugs company, its profits raises and risk from first company will be covered. But here some factors are considerable:
-The net profit earned by you is almost neutral.
-Only rise in capital of sector i.e. cancer treating drugs here, only will give you good profits.
So always use ‘hedging technique for shares with the future scope of the sector rather than companies, especially if both are operating in same compotator business.
In my opinion, the best hedging tools are Derivatives (F&O) and active stocks.
Because if your main investment is one lakh, your hedging investment should be pretty less than 1 lakh, but can protect all your 1lakh. How to achieve this? Simple buying some very active stocks, options, or futures. For example, you invested 1 lakh total as long-term portfolio; buy some options or futures that profitable if stock markets fall (worth atleast 10,000). If really markets hugely fall your 1 lakh will become 50,000. than your options or futures hugely gains and may become 50,000, based on intensity of fall. so, here you successfully protected entire 1 lakh with only 10,000.
Small cap companies have high growth opportunity and when succeeded they make investors huge profits. At the same time small caps may not have strong fundamentals and compromise of high risk. So, some blue chip stocks like reliance, infosys, tata group companies etc should be bought along with small caps.
-Pharma, health care, bank and PSU stocks are hedges for high-risk reality, IT, and related service sector stocks.
-‘Options’ of derivatives segment can be used to hedge against risk of stock market fall.
-Dividend yield stocks are best for constant returns, can be hedged against non-dividend yielding active stocks.
Even though hedging technique is used to insurance our main investments; it should be carefully done, such that ‘hedging should not neutralize your profits’.
For example, consider two pharma companies, one is of manufacturing synthetic cancer treating drugs and other company which manufactures natural cancer treating agents. Now buying shares of both companies is a good example of hedging. Suppose, if popularity of synthetic agents is increasing, synthetic drug company profits and ultimately its stock prices will fall. But now we are hedged with other natural drugs company, its profits raises and risk from first company will be covered. But here some factors are considerable:
-The net profit earned by you is almost neutral.
-Only rise in capital of sector i.e. cancer treating drugs here, only will give you good profits.
So always use ‘hedging technique for shares with the future scope of the sector rather than companies, especially if both are operating in same compotator business.
In my opinion, the best hedging tools are Derivatives (F&O) and active stocks.
Because if your main investment is one lakh, your hedging investment should be pretty less than 1 lakh, but can protect all your 1lakh. How to achieve this? Simple buying some very active stocks, options, or futures. For example, you invested 1 lakh total as long-term portfolio; buy some options or futures that profitable if stock markets fall (worth atleast 10,000). If really markets hugely fall your 1 lakh will become 50,000. than your options or futures hugely gains and may become 50,000, based on intensity of fall. so, here you successfully protected entire 1 lakh with only 10,000.
Labels:
General stock guidance,
Hedging,
Stock market terms
Meaning & Best followable Stock market strategies
A technique or a standard method to be followable in stock markets with aim of getting profits on investments and to minimize the losses as possible.
A strategy is a ‘Complicated mix of technical analysis, present market mood, logical expectations’ that we should select based on ‘Our risk tolerance capacity’ and ‘Time period of investment’
Intraday investor strategies:
An intraday investor would have high-risk capability but he aims at large profits within short periods, so he opts for intraday strategies that include ‘Buying and selling of shares with targets and stop losses’. His strategy includes active and risky stocks, no bother on companies’ fundamentals.
But the aim of a long-term investor is entirely different,
Long-term investor strategies:
Long term investor strategy includes ‘Companies that have strong fundamentals along with good future scope, no bother on intraday activity’. Also shares from different sectors (like Auto, Pharma, IT etc..) with in-depth analysis on every company fundamentals.
There are numerous types of strategies like rumor based, budget based, foreign markets, derivatives, technicals based, sector and stock specific news etc for intraday or short term investors and based on future opportunities of sector, expected companies performance, immix of different sector stocks strategies for long term investors. We discuss about every strategies on later pages of the blog.
Rumor based: where the traders logically deal with stocks that effected by rumors. For example, short-selling rumor stock for intraday would give large profits, and buying the same stock at deep bottom for long term is a right decision.
Foreign markets based: due to globalization all economies of many countries are connected, so of stock markets. Hence the movement of foreign stock markets, especially U.S and European markets will definitely influence Indian stock markets. Some traders will purely trade based on global news and their market movements.
Budgets based: during the day and some days before the announcements of countries or railway budgets, active stock market traders have a real opportunity. Following a strategy based on Rumors, clues, and expectations of budget is many times profitable for short-term investors. On the budget announcement day, working on stock investments according to live news was really helpful of intraday traders.
Government decisions: government decisions like bailout packages; disinvestments from PSU companies will affect stock markets. Strategy can be followed for these. For example, announcement of disinvestments from a particular PSU company, leads to rise in its stock price, but after completion of disinvestments process? Definitely fall.
RBI decisions: strategy spread based on RBI interest or Repo rates is very much profitable for intraday. Say, market expected interest rate deduction (positive news) from RBI during its board meeting day. But RBI had taken a neutral decision towards it, even though stock markets fall because it initially raised expecting good news. Expecting the same case before announcement was a great opportunity of profit for intraday traders.
Important numbers: that relates to stock markets like GDP numbers, industrial growth rates, inflation rates, American job data, economic surveys by media all effect the stock markets and suitable strategy followed basing on expected condition is profitable.
Technical analysis strategies: stock markets will have resistance at 18000 points and have support at 17000 points, like these analysis’s based on past stock market movements will also some times work. But strategies based on technical analysis’s are most popular and most following.
Day of announcement of quarterly results of company: based on expectations of probable quarterly results that company may announce and following a strategy basing on it, will profitable if real case anticipate us.
Like these there are numerous situations in stock markets, which will surely profit you if followed adequate strategies.
A strategy is a ‘Complicated mix of technical analysis, present market mood, logical expectations’ that we should select based on ‘Our risk tolerance capacity’ and ‘Time period of investment’
Intraday investor strategies:
An intraday investor would have high-risk capability but he aims at large profits within short periods, so he opts for intraday strategies that include ‘Buying and selling of shares with targets and stop losses’. His strategy includes active and risky stocks, no bother on companies’ fundamentals.
But the aim of a long-term investor is entirely different,
Long-term investor strategies:
Long term investor strategy includes ‘Companies that have strong fundamentals along with good future scope, no bother on intraday activity’. Also shares from different sectors (like Auto, Pharma, IT etc..) with in-depth analysis on every company fundamentals.
There are numerous types of strategies like rumor based, budget based, foreign markets, derivatives, technicals based, sector and stock specific news etc for intraday or short term investors and based on future opportunities of sector, expected companies performance, immix of different sector stocks strategies for long term investors. We discuss about every strategies on later pages of the blog.
Rumor based: where the traders logically deal with stocks that effected by rumors. For example, short-selling rumor stock for intraday would give large profits, and buying the same stock at deep bottom for long term is a right decision.
Foreign markets based: due to globalization all economies of many countries are connected, so of stock markets. Hence the movement of foreign stock markets, especially U.S and European markets will definitely influence Indian stock markets. Some traders will purely trade based on global news and their market movements.
Budgets based: during the day and some days before the announcements of countries or railway budgets, active stock market traders have a real opportunity. Following a strategy based on Rumors, clues, and expectations of budget is many times profitable for short-term investors. On the budget announcement day, working on stock investments according to live news was really helpful of intraday traders.
Government decisions: government decisions like bailout packages; disinvestments from PSU companies will affect stock markets. Strategy can be followed for these. For example, announcement of disinvestments from a particular PSU company, leads to rise in its stock price, but after completion of disinvestments process? Definitely fall.
RBI decisions: strategy spread based on RBI interest or Repo rates is very much profitable for intraday. Say, market expected interest rate deduction (positive news) from RBI during its board meeting day. But RBI had taken a neutral decision towards it, even though stock markets fall because it initially raised expecting good news. Expecting the same case before announcement was a great opportunity of profit for intraday traders.
Important numbers: that relates to stock markets like GDP numbers, industrial growth rates, inflation rates, American job data, economic surveys by media all effect the stock markets and suitable strategy followed basing on expected condition is profitable.
Technical analysis strategies: stock markets will have resistance at 18000 points and have support at 17000 points, like these analysis’s based on past stock market movements will also some times work. But strategies based on technical analysis’s are most popular and most following.
Day of announcement of quarterly results of company: based on expectations of probable quarterly results that company may announce and following a strategy basing on it, will profitable if real case anticipate us.
Like these there are numerous situations in stock markets, which will surely profit you if followed adequate strategies.
Terms meaning: Trading, Traders of stock markets
Even though investment and trading have same textbook meaning, ‘Trading’ term is used for active investments and persons who trade in stock markets are called Traders.
In relation to stock markets ‘trading’ term is getting more response, replacing investment. In simple, trading means active buy and sell deals in securities like shares, derivatives, commodities, currencies, mutual funds etc..
For assurance, all intraday deals are called as trading.
In foreign stock markets word ‘Trading’ is more popular than that of Investment
To discuss about live or intraday stock markets, we use the term trading.
For example, we use ‘market trading hours’ to say working hours of markets, because here the case is about intraday markets.
Another example we quote that a stock is trading at Rs.x/- or Sensex is trading at X points, as they mean live stock markets. Other examples are trading volumes, traded stocks all are related to day markets.
The stock exchanges are themselves naming some securities like ‘Currency trading’ ‘Mutual fund trading’.
Different types of trading:
Cash trading: The trading in normal shares is termed as cash trading. It includes both intraday and delivery deals.
Derivatives trading: The trading in derivatives or F&O section. It includes two types.
Futures trading: the buying, selling, shorting of futures of stocks or index refers to futures trading.
Options trading: the selling and buying of ‘calls and puts’.
Commodity trading: The trading in different commodities like metals, Agri-commodities.
Gold trading: The buying and selling of gold units through Stock markets or Gold ETF’s.
Currency trading: The betting of various currencies over other currency rates. For example, rupee against dollar.
Trading options available and their main purposes:
Trading in shares: common form of investment helps to grow our money along with the growth of Indian companies. Generally return good profits in long-term investments. Risk level is optimum and mainly depends on company fundamentals and its sector.
Derivatives trading: they are more risky and return great profits, also useful for hedging to protect our other investments. For example, by buying appropriate futures or options, losses from our shares can be minimized.
Trading in commodities: useful for the Business-persons in that commodity field. For example, trading in steel will very beneficial for steel Business-man to protect themselves from sudden variations in steel prices.
Trading in Gold units: on the recent times, gold is competing with shares in returns. Gold trading is also an best opportunity to tolerate the rising inflation troubles.
Trading in currencies: helpful for exporters and importers to protect their profits, due to losses occurring from sudden fluctuations in currency exchange rates.
In relation to stock markets ‘trading’ term is getting more response, replacing investment. In simple, trading means active buy and sell deals in securities like shares, derivatives, commodities, currencies, mutual funds etc..
For assurance, all intraday deals are called as trading.
In foreign stock markets word ‘Trading’ is more popular than that of Investment
To discuss about live or intraday stock markets, we use the term trading.
For example, we use ‘market trading hours’ to say working hours of markets, because here the case is about intraday markets.
Another example we quote that a stock is trading at Rs.x/- or Sensex is trading at X points, as they mean live stock markets. Other examples are trading volumes, traded stocks all are related to day markets.
The stock exchanges are themselves naming some securities like ‘Currency trading’ ‘Mutual fund trading’.
Different types of trading:
Cash trading: The trading in normal shares is termed as cash trading. It includes both intraday and delivery deals.
Derivatives trading: The trading in derivatives or F&O section. It includes two types.
Futures trading: the buying, selling, shorting of futures of stocks or index refers to futures trading.
Options trading: the selling and buying of ‘calls and puts’.
Commodity trading: The trading in different commodities like metals, Agri-commodities.
Gold trading: The buying and selling of gold units through Stock markets or Gold ETF’s.
Currency trading: The betting of various currencies over other currency rates. For example, rupee against dollar.
Trading options available and their main purposes:
Trading in shares: common form of investment helps to grow our money along with the growth of Indian companies. Generally return good profits in long-term investments. Risk level is optimum and mainly depends on company fundamentals and its sector.
Derivatives trading: they are more risky and return great profits, also useful for hedging to protect our other investments. For example, by buying appropriate futures or options, losses from our shares can be minimized.
Trading in commodities: useful for the Business-persons in that commodity field. For example, trading in steel will very beneficial for steel Business-man to protect themselves from sudden variations in steel prices.
Trading in Gold units: on the recent times, gold is competing with shares in returns. Gold trading is also an best opportunity to tolerate the rising inflation troubles.
Trading in currencies: helpful for exporters and importers to protect their profits, due to losses occurring from sudden fluctuations in currency exchange rates.
Labels:
Stock market terms,
Trading and traders
Meaning, Investors and Investment stock market terms
The cash inflow aided to start a business model or to further extend it, is called as investment. The persons who made investment are called investors. In view of stock markets the term ‘investment’ mostly refers to long-term positions.
Unlike credit or loans, investment was an evolved technique that involves ‘Sharing’. We pay back credit at bounded interest rate irrespective of profits or losses in business, credit suppliers not involves in our business decisions. But in an investment process everything is shared between investors, which may be business decisions, profits or losses.
The stock markets are one type of investment enhancers, that oppurtunize investment of even small money from public into large companies. The buying of shares (equities) is one of well-known prospect offering by stock markets. Apart from the equities, wide range of investment opportunities is offering by stock exchanges like derivatives, mutual funds, commodities and currency trading etc.
Investment is a best process to make more money than simply savings, but investment involves risk. Hence enough care should be taken while investing. Stock markets are one of the investment opportunities available, but they are more popular and preferable than other traditional investments.
Here is a comparison between traditional Property investment and Stock market investment:-
Property Investment: we may not have complete knowledge on place we want to buy an estate. Information about that site may not available or little available on media and web. Large amount of money is required at a time. Buying and selling of property is very complex.
Stock market investment: large number of magazines, websites are available to discuss on best shares to invest. You can start stock market career with small money. Buying and selling of shares is very easy and instant task.
Unlike credit or loans, investment was an evolved technique that involves ‘Sharing’. We pay back credit at bounded interest rate irrespective of profits or losses in business, credit suppliers not involves in our business decisions. But in an investment process everything is shared between investors, which may be business decisions, profits or losses.
The stock markets are one type of investment enhancers, that oppurtunize investment of even small money from public into large companies. The buying of shares (equities) is one of well-known prospect offering by stock markets. Apart from the equities, wide range of investment opportunities is offering by stock exchanges like derivatives, mutual funds, commodities and currency trading etc.
Investment is a best process to make more money than simply savings, but investment involves risk. Hence enough care should be taken while investing. Stock markets are one of the investment opportunities available, but they are more popular and preferable than other traditional investments.
Here is a comparison between traditional Property investment and Stock market investment:-
Property Investment: we may not have complete knowledge on place we want to buy an estate. Information about that site may not available or little available on media and web. Large amount of money is required at a time. Buying and selling of property is very complex.
Stock market investment: large number of magazines, websites are available to discuss on best shares to invest. You can start stock market career with small money. Buying and selling of shares is very easy and instant task.
Delivery buying of Shares in stock market Trading
If the deals are not settled on the same day they are called as delivery deals.
If you are buying shares and selling on the same day it is ‘Intraday trading’, if are not sold on the same day they are called ‘Delivered shares’
No mean, whether your bought shares are sold on the next day or after far long days, they come under delivery trading. Margin available is less for delivery trading compared to intraday trading, but brokerage fee is more for delivered shares (many brokerages are charging 4paise/100rs investment for intraday deals and 40paise/100rs investment for delivery deals). The delivered shares are settled basing on the T+2 settlement process.
What’s benefit for delivery traders over the intraday traders is ‘opportunity to bag opening profits, if any’ (losses also!). For example the closing price of a stock X by today’s closing is Rs.100/-. Say, very good news to stock markets came on today after the closing of markets. All we know markets gains with good news. On next day, the stock is no more available at its same price, From opening itself price may go for 110 or 120, So intraday investors are missed the gains from that stock.
If you are buying shares and selling on the same day it is ‘Intraday trading’, if are not sold on the same day they are called ‘Delivered shares’
No mean, whether your bought shares are sold on the next day or after far long days, they come under delivery trading. Margin available is less for delivery trading compared to intraday trading, but brokerage fee is more for delivered shares (many brokerages are charging 4paise/100rs investment for intraday deals and 40paise/100rs investment for delivery deals). The delivered shares are settled basing on the T+2 settlement process.
What’s benefit for delivery traders over the intraday traders is ‘opportunity to bag opening profits, if any’ (losses also!). For example the closing price of a stock X by today’s closing is Rs.100/-. Say, very good news to stock markets came on today after the closing of markets. All we know markets gains with good news. On next day, the stock is no more available at its same price, From opening itself price may go for 110 or 120, So intraday investors are missed the gains from that stock.
Labels:
Delivery trading,
Stock market terms
What is Intraday trading or day closure deals?
Intraday trading: It is one type of investing practice in stock markets involving both the deals, buying and selling on the same day.
You now! Many investors are now living by stock trading? They are depending on possible profits earning on intraday market sessions.
In intraday trading ‘Bought shares, should be returned (by selling) on the same day before market closing. Likewise shorted shares (selling shares actually without having them) should be bought on same day. General the brokerage fee for intraday transactions is much less than delivery deals.
Generally Intraday investors pick actively trading stocks, which in sense swing frequently; so that credibility of profits will be more. Even falling stocks are also profitable in intraday trading as we can ‘short sell shares at high price and return by buying at low price’.
Characteristic feature in intraday trading is risk. Blue chip or index stocks definitely will return good profits in long term, but they also swing widely on intraday sessions. So even a exclusive blue chip or index stock investor, may also get huge losses on intraday trading.
Intraday trading was generally done basing on ‘technical points of targets and stop losses’ following either general market trend or swing market. Some investor’s even trade basing on rumors.
Now a days intraday investors are conjuring more to enter derivatives, as profit opportunity is unlimited within a single session. Derivatives are also useful in day tradings to protect our investments.
In fact, intraday investments are no way useful for companies, the middleman’s’ benefiting by intraday volumes are brokerages and stock exchanges.
You now! Many investors are now living by stock trading? They are depending on possible profits earning on intraday market sessions.
In intraday trading ‘Bought shares, should be returned (by selling) on the same day before market closing. Likewise shorted shares (selling shares actually without having them) should be bought on same day. General the brokerage fee for intraday transactions is much less than delivery deals.
Generally Intraday investors pick actively trading stocks, which in sense swing frequently; so that credibility of profits will be more. Even falling stocks are also profitable in intraday trading as we can ‘short sell shares at high price and return by buying at low price’.
Characteristic feature in intraday trading is risk. Blue chip or index stocks definitely will return good profits in long term, but they also swing widely on intraday sessions. So even a exclusive blue chip or index stock investor, may also get huge losses on intraday trading.
Intraday trading was generally done basing on ‘technical points of targets and stop losses’ following either general market trend or swing market. Some investor’s even trade basing on rumors.
Now a days intraday investors are conjuring more to enter derivatives, as profit opportunity is unlimited within a single session. Derivatives are also useful in day tradings to protect our investments.
In fact, intraday investments are no way useful for companies, the middleman’s’ benefiting by intraday volumes are brokerages and stock exchanges.
Labels:
Intraday trading,
Stock market terms
What are Actively trading circuit breaker stocks?
Actively trading stocks, Even though not an official terminology, its common word for day traders.
Stocks whose prices change frequently, probably in daily circuits are synonymously pronounced as actively trading stocks. Investors of active stocks get better profits, than normal investors as Rs.100/- stock may suddenly jump to 120 or more. Why some stocks only turns active? Certain reasons may be low floating value of stock or investor fancy, temporary sector or company specific reasons. But problem associated with them is risk. Superfluous care with suitable hedging should be done while investing in active performers, as in general stocks that ‘gain more, lose more’.
The stocks day performance will not affect long-term returns. Hence based on company fundamentals active stocks are also suitable for long investments. But avoid active stocks for long investments unless it is of fundamentally very strong company. We negative sign active stocks for short-term traders.
Our recommendation is to ‘choose a active stock that is seated on BSE 30 or NSE 50 indexes, so that we have only minimal risk, but trustful returns. Basing on above advice our top recommendation is ‘JP associates’ followed by ‘DLF’. In general real-estate stocks are active in nature, but many of them comprise high risk. So picking a real estate stock that is fundamentally strong is an ideal choice. ‘Indian bulls real estate’ is our favorite active stock in daily circuits.
Stocks whose prices change frequently, probably in daily circuits are synonymously pronounced as actively trading stocks. Investors of active stocks get better profits, than normal investors as Rs.100/- stock may suddenly jump to 120 or more. Why some stocks only turns active? Certain reasons may be low floating value of stock or investor fancy, temporary sector or company specific reasons. But problem associated with them is risk. Superfluous care with suitable hedging should be done while investing in active performers, as in general stocks that ‘gain more, lose more’.
The stocks day performance will not affect long-term returns. Hence based on company fundamentals active stocks are also suitable for long investments. But avoid active stocks for long investments unless it is of fundamentally very strong company. We negative sign active stocks for short-term traders.
Our recommendation is to ‘choose a active stock that is seated on BSE 30 or NSE 50 indexes, so that we have only minimal risk, but trustful returns. Basing on above advice our top recommendation is ‘JP associates’ followed by ‘DLF’. In general real-estate stocks are active in nature, but many of them comprise high risk. So picking a real estate stock that is fundamentally strong is an ideal choice. ‘Indian bulls real estate’ is our favorite active stock in daily circuits.
Tell me what is Mutual fund NAV?
NAV means Net Asset Value; it represents the current value of our mutual fund units at which they are trading. It is similar to CMP of shares in stock markets
NAV is measure only useful for open traded mutual funds, as buying can be done at desired NAV value.
Like shares NAV changes based on the market conditions and securities that mutual fund company is invested. It continuously alters on the intraday during trading hours during market working days.
The NAV during initial fund issue is the base value of that fund. The base value NAV is allotted on company preference.
But unlike in shares the NAV value is not affected by public fund holders (Demand to fund), say that even large investor response had come to fund its value (NAV) cannot increase.
NAV is measure only useful for open traded mutual funds, as buying can be done at desired NAV value.
Like shares NAV changes based on the market conditions and securities that mutual fund company is invested. It continuously alters on the intraday during trading hours during market working days.
The NAV during initial fund issue is the base value of that fund. The base value NAV is allotted on company preference.
But unlike in shares the NAV value is not affected by public fund holders (Demand to fund), say that even large investor response had come to fund its value (NAV) cannot increase.
Labels:
Mutual fund NAV,
Stock market terms
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