Share Trading | Stock Markets

Short Selling Introduction

2009-08-15T07:28:00.000-07:00

You may have heard the word Short Selling in the context of stock markets many times. Big investors and hedge funds use short selling often. Short selling is the practice of selling a stock which you do not own expecting it to fall and later buy it back to return it to the original lender.

Sounds confusing ? Actually it is not. Your broker lends a stock to you for a fee. You do not have to invest a penny in the beginning. When you sell the shares, the proceeds from those stocks will be credited your account. Later, you have buy the same quantity of shares back because you have to give it back. If the share price goes down, you will get profit and if share price shoots you have to sustain the loses. This process of giving the stocks back to the lender is called covering.

An example will make it more clear. Suppose you want to short sell stocks of a company named XYZ Bank. The current price of the stock is Rs. 500. You borrow 100 shares from a broker and sell it in market. The sum of 50,000 is credited in your account. Later the price of the stock dips to 450. You buy back 100 shares which costs you Rs 45,000 and give it back to your lender. This give you a neat profit of Rs 5,000 minus the lender's fee for giving you stocks to short sell.

Needless to say, short selling is a very risky affair. In the above example, if the price of XYZ Bank shoots up to 550, you stand to lose. Short selling is done with the aim if speculating and hedging. This works in an overpriced market which is likely to fall soon.

Swing Trading Introduction

2009-06-26T02:27:00.000-07:00

Swing Trading For Beginners

The beginners who want to make money online trading in stock markets at low risks can go for Swing Trading. Swing trading is very popular method of trading not just among those who have just stepped in, but also for those persons too who are operating for some time. But this method is most recommended for novices due to its nature of trading.

Swing Trading Introduction

In Swing Trading the trader holds a stock for a period ranging from one day to two or more weeks. Its is basically based on the premise that the stock prices of good companies tend to remain stable over a course of time. There are variations in prices in short term they remain more or less within predictable price range. The swing trader takes advantage of these short term fluctuations in the market.

To put it in another words, stock markets remain fairly stable at macro level but there are small swings at micro level over a course of days or weeks and swing trader cashes in on that. Needless to say, this strategy proves profitable in the stable market conditions. There are times when stock markets swings wildly. Those are not the times for investing through swing trading.

Swing Trading Strategies

There are certain strategies which can be used to make money through swing trading. One such strategy involves choosing the right stock. By this I mean right stock according to market conditions. You have to study the short term movements of stock market to find out just the right stocks. The large cap stocks or the stocks of blue chip companies can be good contender in the beginning. But this does not can be said to be a rule of thumb. Stock markets are highly unpredictable even in good times and you have to use your discretion. The recent Satyam Computers scandal debunked all the prevailing outlook about the company.

One more thing that is evident is that swing trading reaps most profits in a stable market. So the choice of market can also be crucial in adopting this method of online trading. One has to be always alert to the variations in markets and a lot of digging and plodding is required sometimes to find a good scrip. Generally, the swing trader follows a rising scrip and the moment there is a downward trend it is time to switchover and book some profits.

Stock markets can be a source of handsome returns. Sure, share markets are unpredictable and prone to wild swings at the outbreak of a small rumour but it is also true that these markets pay handsomely to a good player. Swing trading can be your entry into the stock markets effortlessly.

Future Trading Explained

2009-06-19T01:26:00.000-07:00

Futures are a kind of derivative contracts in which one is required to buy or sell an underlying asset like commodity, stocks, currency and more. Or to put it in other words, future contracts are contracts in which the parties agree to buy or sell a specified quantity of stocks or commodities at a specified price at a future time. It is worth noting that, the physical delivery of the assets on the expiry of contract is not compulsory as these contracts by their very nature are entered into with the aim of speculation or hedging.

If this still does not clear the cloud, here is an example of a fictitious factory.

Bill , the owner of Juicy Factory which produces juice, is considering to start manufacturing berry juice. But since the product is new for his area, he is a bit worried about his investment in berry juice which costs him $1 per bottle. He enters into a futures contract with Jack who agrees to pay $3 for every bottle at the end of three months. Now, suppose the news of a berry juice scam breaks out and since there are few takers as people grow skeptic about berry juice, the price falls to $2 in market price, Bill stands to gain $1 per bottle of juice. But if price shoots up to $4 because people suddenly become interested in berry juice because a research shows that it is good to fight cancer, Jack will earn $1 per bottle as he can sell them in market at higher price than he had to pay.

Here Bill is hedging and Jack is speculating. There is more to future trading but this should give you an idea. In the stock market, shares become the underlying assets.

Day Trading 9 Tips To Make Money

2009-06-18T07:36:00.000-07:00

Day trading is perhaps the fastest way to make money through trading in stocks and also perhaps it is the fastest way to lose money too. Some day traders buy and sell the same security several times a day to take advantage of the volatile market but in the process some gain and some lose their shirts! Some experts have even gone totally against day trading and recommend avoiding these type of high risk transactions. But day trading has its own charm.

Although there are no sure shot ways to make money and avoid losses, there are certain tips that can be used as guidelines while going for this type of trading.

1.) Limit Investment : It is very essential that you set the limit on how much are you going to bet in markets. Many time the reason of failure is investing too much.

2.) Avoid Over Trading : Some traders incur loss because they have a trade-mania. You should realize that it is not necessary to trade every day. Trading just for the heck of it is a foolish thing and will make you poorer.

3.) Learn To Take Losses : Losses and gains are the only two possibilities when you day trade. One must be very particular about the quantum of loss one is ready to bear.

4.) Be Skeptical : Browsing online forums and chat rooms is a very good way to find out what others are thinking about the market but you should be very very skeptical about what they say as most of them are noobs and do not know a dime about markets.

5.) Avoid Being Carried By Hype : It is very essential not to make trading decisions based on prevailing hype. More often than not these hypes are generated by big players themselves.

6.) Catch The Trend : It may sound very obvious that one has to watch the trends closely to get anything out of it. But what is more essential is to catch the trend when it is beginning to take shape.

7.) Study A Lot Of History : Yes, digging the past can sometimes be very helpful in preparing for the future. Why did a past transaction went wrong or why did you hit a goldmine in a past trade may be the questions worth asking yourself.

8.) Trade Unemotionally : This may sound very insignificant but it is very necessary not to be affected by a past success or failure. Emotions often cloud decision making process.

9.) Volatile Stocks Are You Best Bet : Volatile markets are raison d'etre of day trading. Thus those stocks whose price change frequently should be on your radar.

Simple Stock Market Trading Tips

2009-06-17T03:02:00.000-07:00

Share market is a place many approach full of dreams. There are many stories of rags to riches and vice-versa. There are investors who started from small amount and today they are earning decent while there are many who have lost all their money in the stock markets. While there are no magic tricks to get successful in the share markets there are some fundamental tips that one should always keep in mind. These are the things that sometimes even seasoned investors ignore and as a result book heavy losses.

Use You Own Brains
No matter what the situation is, use your own brains before investing even a single dime in the stock markets. There are so called market movers who have some big money invested in the markets. They try to speculate smart by creating fake news about a particular company they are interested in and when people buy those shares, the stock prices of those shares climb up. After that these big wigs offload their own stocks at heavy profits making big money while the prices tumble down. So use your own brain, study the company fundamentals and gather as much information as possible to get the realistic view of the company.

There Is Money In Markets
No matter what the situation is there is money to be made in the share markets. Yes, that is true. However worse the economy may be there will always be trading in shares and there is always be an scope to make money in the share markets. Don't go by rumours or the advices of doomsayers.

Invest Only What You Can Afford To Lose
Before going for the share market always invest only that much money what you can afford to lose safely. Share markets are volatile and nobody known which turn the market will take and how many scrips will lose their positions. You got to have sufficient capital. If you do not have do not enter in stock markets till you have.

Know Your Goals
Always decide in advance how much profit you want to make on a particular stock. People usually tend to lose because they expect more and more when a stock has reached a certain level. A successful trader known to book his profits.

Persistence
This is a very important quality of a successful trader. A successful trader continues to do trading even if results are not good and market conditions are worse than ever. There can be many instances cited where a trader stroke gold before a series of losses just because he persevered.

Enough for now, I will certainly bring up more tips and trick for online trading. Till then, happy trading!

Online Share Trading Account - Why To Have One?

2009-06-16T23:52:00.000-07:00

Although most of the people would like to make money in share markets, there are some factors that hold them back. For instance, the sheer volume of paperwork, lack of information and tools, having to rely on a broker for selling and buying stocks and more. But now technology has made this a very easy task to trade in stocks online. Opening an online share trading account may be an end to all your worries.

Opening online trading account will make dealing in shares a breeze. It will also give you loads of information on your fingertips. You can browse stock markets at the click of a mouse and do not have to disclose your confidential information like account no to a person as everything is done online.

Online share trading requires two more accounts, that is a bank account and a demat account. Most of the banks today offer 3-in-1 integrated accounts like SBI, ICICI, HDFC. Then there are dedicated brokers like Sharekhan with which you open you trading account and later attach it to a bank account so that trading account has money to trade.There are certain benefits of investing in stocks online.

Online Share trading Account - Benefits
1.) Your information remains confidential.
2.) You get the quality detailed information and analysis at your disposable.
3.) The transactions are executed very fast and almost in real time.
4.) Your money is safe.
5.) There is a dedicated customer care to answer your queries.
6.) You can make a variety of investments like stocks, mutual funds and IPOs.
7.) There are value added services to like mobile alerts about rising stocks.
8.) You can track your portfolio online.

Precautions While Opening Online Account
While there are many options available when you go for choosing an online account, there are certain points to be kept in mind.

a.) First and foremost is the credibility of the institution you are opening account with. In the past there have been many instances where fraud brokers duped unaware investors of their money. As a general rule, go for an institution with solid financial backing.

b.) Next you should consider whether your online broker allows you to invest in stocks, mutual funds and IPOs or some of these. Ideally you should be able to trade in all of these.

c.) One should also consider the quality of information you will be getting from their websites. Is the info on their financial portal properly categorized so that you can browse through it easily and in an effective way so that it can help in making decision.

d.) Before finalizing your decision to open trading account with a stock trading service provider, one should go for the demo of the whole trading procedure. You should be able to trade effortlessly and quickly. Watch out for the navigation, ease of selecting various options and variety of reports available in their trading application.

Opening a share trading account is very easy these days but you have to take necessary precautions before investing your money with a service provider. One your account is up and running, you can start buying and selling shares and making money.

Online Share Trading - Requirements

2009-06-16T22:32:00.000-07:00

Before getting started with online share trading it is essential to have certain things as without them you can not start share trading. Of course, you can start trading in stocks without these things but them you have to contact a share broker who can buy and sell shares on your behalf. But that way is a bit clumsy as you have to depend on the broker for advice and moreover, it is too slow a process to buy and sell stocks through a broker. This type of trading is called offline share trading. To go online you will need the following :

Demat Account
The first thing that is required is a Demat Account. Without demat account, you cannot do any trading in the stock market.There are many online broking houses operated by famous companies which facilitate opening a demat account. The examples are Sharekhan, Icicidirect, Reliancemoney and many more. Simply go to their site for more info. You can go for any of them but the things to consider here are brokerage rates charged by the broking company, hidden charges if any. Moreover, you should first go for an online demo of the services these brokers are offering before going ahead.

Computer and Internet Connection To Trade Online
One you have a demat account, you need a computer so that you can trade online. You can go for a desktop or a laptop. Both are available at competitive prices these days. A laptop is preferred because of its mobility.

The last thing you need to get online is the most obvious, the internet connection. Go for a broadband connection so that internet speed is not an issue when you go for trading online. There are many options from Tata Indicom to Airtel.

Always remember, that if you are really interested in share trading, these things are must. Some people use internet cafes for share trading. This can be very risky with internet frauds increasing day by day. So better shell out some money and get your own setup up and running and you will be trading in stocks online in little time.

Can A Forex Trading Software Help You Make Money?

2009-06-15T23:22:00.000-07:00

Forex Trading
One of the most exciting thing about Forex Trading is that the currency markets are live through out the day and night. There is no closing time. And the reason is that currency markets are scattered all around the globe. When one market closes, another one starts operating. Bu unfortunately, the same thing makes currency trading one of the most complex business. You have got only so much waking time and that too filled up with things other than sitting in front of a computer screens , watching the tickers and then trying to make the sense of all this.

Forex Trading Course
Anyone who has flirted with the idea of making money online trading in currency, has found one or two problems. The first and the obvious one is the lack of knowledge about forex trading and another is the sheer complexity of currency markets and the brisk speed they operate with. It is not possible for a human mind to comprehend so much details. The first problem can be overcome by joining a good forex trading course.

Forex Trading Software
So far as second problem is concerned, there has to be some sort of software that does the dirty calculations for you and is on even when you are asleep. So that when you are back to work everything is on your fingertips. In fact there are many softwares for the purpose. A forex trading software is a kind of investment tool that can make you take intelligent decisions. You can have more accurate calculations. Currency trading softwares also come with the charting tools which makes numbers look less boring. What is more, these softwares also provides news tickers which gives you the relevant news which may affect your decision to trade in a currency. While choosing the software you have to do a bit of search on the web and even ask the experts. Moreover, most of the companies offer a free forex trading account so that you can try it before actually buying it.

Forex Trading Software : What To Expect
Now there is one caveat though. What do you expect from a forex trading software ? I have heard some people opine that the currency trading software will do all the work for you. You just sit alone and everything else is taken care of by the software. Foolish words! The software can only do what it is designed to and is best at. And that is number crunching. Ultimately, the decision lies with you. There is no substitute for human mind and discretion. So if you are thinking of entering into the fast changing field of Forex Trading, consider a good trading software and a good one.

Day Trading In Stock Markets

2009-06-15T23:13:00.000-07:00

Day Trading Introduction

Day Trading is a kind of trading in which all the transactions are settled on the very day itself. Whatever you buy in stock markets, you sell on the very day when markets close. This is a very popular way to make money online trading in stocks or shares. One can easily see that by its very nature day trading is a very tough to master.

Day Trading For Beginners

Making money effortlessly is what we all want. Most of us want to have job or profession which does not require to bow down in front of a boss. It is the dream of many to be self employed as it allows you to be your own boss. Working from home is the aspiration of many. And one of the few options available to anybody who wants to work from home is day trading. In fact, day trading has a kind of glamour which attracts many novices. Most of them wind up booking losses but that is another story!

Day Trading Risks

This is the fact that day trading promises a decent steady income with the least effort, but this is also equally true that this profession is a risky one. One is at the mercy of volatile stock markets all the time. One wrong way and your hard earned money disappears into the maze of stock markets.

How to Approach Day Trading

But if one has a proper strategy and enough information, one can earn a decent income from day trading. The first thing to be kept in the mind is that you should not expect to pay your bills through day trading from the very first day. Day trading is an art which can be mastered with experience. Don't put too much money in the stock markets in a single go. Do not go solely by hunches although many traders have reported that they follow their gut feelings but for that even you have to hone your hunches which comes from experience gained through operating in the middle of the market which reacts with in the split of a second. Before jumping into the trade, it is always good to educate yourself. You can do so online as many companies provide softwares which allow you to play the stock market games with real time conditions. You do not lose a dime and you watch the wild swings of stock markets from a safe distance.

Make Money In Stock Markets

When you gain some experience, you can translate your strategies you learnt in a virtual environment to real one. You have to get a day trading account through which you can make trades. The account lets you trade stocks from anywhere in the world. With time and experience you are surely gonna get expert at day trading.

Derivatives : Introduction

2008-09-23T02:03:00.000-07:00

Derivative word literally means something that is derived like petrol is derived from oil and as such depends on it. In the terms of money market and online trading the derivative means an asset which totally depends on an underlying asset. That asset can be any thing that can be traded online or offline in the market like commodities, stock, currency and even livestock. Derivatives have no independent value. The value of derivatives is dependent on the underlying asset it is representing.

Let us understand the essentials of derivatives and types of derivatives first. Derivatives are broadly divided into two types, options and futures.

Option is a type of derivative through which the buyer of the derivative contract gets the right either to buy or sell the specified quantity of underlying asset, upon which derivative is based,for an agreed price. The time of buying or selling can be on or before the specific future date. One thing to be noted here is that the buyer in question is not under an obligation to do so.

Futures are the derivative contracts which are very different from options. These contracts require one to buy or sell a specified quantity of asset on a particular date, which is also called expiration date, at the current market price. The valid periods for which futures contracts can be done are one , two or three months.

Now that you know about options and futures derivative contracts, you must understand the reason why would anyone trade in derivatives, risky as they are, when there are so many options available. The first reason is that trading in derivatives allows you to take advantage of market swings. If you have an intuition or advice about how market will move you can speculate and make some fast money. The second reason is that enables you to trade even if you have small budget because you do not have to pay the whole price of the underlying asset. You have to pay a small fraction of the whole value.

This is just the tip of the iceberg . There are hell lot of details that should be known so that one can really make some money trading in derivatives. The concept of derivatives is a complex one and in later posts some of those concepts will be clarified.

MoneyControl , NSE India The Tools To Help You Make Money Online Trading

2008-08-05T01:43:00.000-07:00

Tools To Make Money Online Trading

To make money online trading in stocks is very tricky even for the most experienced investors and high profile player. The history stock markets is filled with the instances of many high time investors ruining their whole money in the pursuit to double or triple it. When a small investor enters the market with the desire to cash in on the money making opportunities through online trading, he is faced with information overload from media advertisements , news channels where everybody seems to be blowing his own trumpet. Every financial news channel seems to offer you best and insider information to help you make money online trading. In such a scenario , what do you do? Here I present some tools that are at your disposal when you are looking for information on how to go for online trading in stocks and shares.

MoneyControl Web Site

MoneyControl is the largest information hub for financial news and stock reviews. Here you can find the real time updates about the equities and shares . You can find how stock market is moving and the comments an analysis will help you to assess what may be around the corner and which direction the market may move. Their site is www.moneycontrol.com. It is an site od CNBC TV18 and has access to the later's experts and analysis warehouse. To start on the path of making money online trading make it a habit to visit this site regularly to keep yourself updated.

NSE India

NSEIndia (www.nseindia.com) is the official site of National Stock Exchange , the governing body in India of Stock Exchanges. Here you can find authoritative information like securities market information, including real time graphs, analysis like moneycontrol. You will find real time tickers that keeps you updated about the minute moving in the market.

These are the prominent two tools that will help you make informed decisions when you embark on the journey to make money trading in shares and stocks and even commodities. This is just the tip of the iceberg and there additional resources that can help you avoid the pitfalls of online trading which will for the subject of my later posts.

Commodity Trading Introduction

2008-08-02T06:58:00.000-07:00

Trading commodities can also be a good option to make money online. This trading is not new and has prevailed for a long time. Commodities have always been traded for money. What is new is the technological flavour. Now you can trade commodities on the web for profit.

The expanse of world wide web has changed the commodity trade both in shape and scope. what has changed radically is the method and mechanism of trading in commodities. But the fundamental concepts remain same no matter how much the technology invades on the prevailing way of doing commodity trade.

Commodity can be used to denote any type of tangible thing which can be traded for money. But from the perspective of trading online, commodity has a specific meaning which is governed by national laws and policies.The Foreign Currency Regulation Act (FCRA) defines commodity as 'every kind of movable property other than actionable claims, money and securities.'

Commodity trading precisely refers to trading in commodity spot and derivatives (futures). If someone is expecting a surge and wants to take a buy position or want to take sell position because he is expecting a southward turn in the prices of commodities like gold, silver, metals, or crude, then one can do so by trading in commodity derivatives.

If you want to make money online trading in commodity then there are many ways to do it. Commodity derivatives are traded on the National Commodity and Derivative Exchange (NCDEX) and the Multi-Commodity Exchange (MCX). These exchanges deal in many types of commodities like metal comprising of Gold, silver, agri-commodities including grains, pulses, spices, oils and oilseeds and other commodities like mentha oil, crude.

The essence of trading commodities futures is akin to trading in stocks and shares. Like those markets commodity is also prone to price swings and to earn anything in these markets the principles are also same. Patience and knowledge go a long way in this trade to enable you to make money online.

Currency Trading : Introduction

2008-08-02T05:03:00.000-07:00

Trading in currency can a very lucrative way to make money online. Before entering the currency trading business you should get the required Forex education training. And then you got to have some experience. This step of gaining knowledge and getting hand of volatile markets is very necessary before you jump on the currency trading bandwagon.

As is true with all kinds of online trading, currency trading also has its set of people who trade currency for profit. There can be short term traders who try to close their deals on the similar day and there are many who prefer to earn long term gains. In my experience , traders who take long term perspective surely get successful. While there is certain risk involved in short term gains as moves of market can not be predicted precisely and depends on many external and internal factors.

Forex currency trading is done in amounts of currency called lots. these lots can be purchased on margin. The way you should approach Forex currency trading depends on many complex factors which may or may not be economic in nature. Like, history of the currency price or particular country's political climate, inflation rate. There are many different systems of Forex currency trading.

In the past, smaller investors were not permitted to indulge in foreign currency trading for the reason that a large amount of deposit was required. But in recent years, the opening up of economy and wide penetration of media this way to earn money online is available to small investors too.

If you really want to plunge into the currency trading, there are many ways to learn it. The best way in my opinion is to browse through forums. These forums provide sincere and updated information on how to make money trading in forex. You have to google a lot to search a suitable forum or a good website as there are lots of bogus websites out there to fool you into giving up your money.

Online Trading Introduction

2008-08-01T07:11:00.000-07:00

Online trading is a very attractive way to make some money. The reason is not hard to find out. With media reaching out to millions of homes today , the exposure of a common man to many things have been increased. Stock Market is one of them . But not the only one. One can make money online in many ways , trading different things. For example, you can trade currency or you can trade stocks and shares. Event commodities can be traded online these days to make money. The options are endless and very attractive.

Money Making Risks
But this attraction is a dangerous one. Many have lost their money in share markets. Stock markets are prone to fluctuations and for a small investor with small corpus this may spell disaster. So there is a lot that goes into getting profits through trading in share markets.

Trading Online : How To Start
Before embarking on this high risk and high returns market one should take care of many factors which may influence his decision and thus his earnings online trading. First and foremost thing to keep in mind is that you should have a long term perspective. Short term gains are there but being a small investor one should keep a major portion of his portfolio for long term investment for say three years. It is your money and you can not risk all of this on a single day trading. More often than not people burn their fingers trying to make money online on a daily basis trading the stocks in a volatile market.

Trading Online To Make Money
One major drawback of today's deep penetration of media is that people watch a lot of news and analysis and somehow start to believe in each and every rumour and think of themselves as expert. Most of the small investors aspiring to make some quick money through online trading in stocks and securities become smug in the start and some even take it as a full time job to quit only after a few days bearing losses in markets. People see the tickers rolling on news channels whole day long and are overloaded by information and lose common sense to invest in market.

The best tool to approach stock markets to make anything through trading in shares and stocks is the right awareness and knowledge. There is no substitute to knowing how to make your way through the confusing maze of share markets. You have to be your own teacher. And most important one should not expect the quick return on the investments. Careful study of the fundamentals of nomenclature of stock market terms and getting acquainted with the fundas of stock market will give you a solid start. A study of the prevailing economic scene and events certainly goes a long way in a sustaining a good income online.

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2008-08-01T02:11:00.000-07:00

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The information & details provided here are for informational purposes only and are not a solicitation to buy or sell any of these mentioned financial securities. Investing & Trading involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Neither the Editor(s), the Author(s), the publisher(s), nor any of their respective affiliates is responsible for any errors or omissions on the Website. The Website's commentary, analysis, opinions, advice and recommendations represent the personal and subjective views of the Editor, and are subject to change at any time without notice. The logos and images displayed on this site may not correspond to the original logos of the products and may not link to the respective official sites. For Any questions or comments, please mail at @gmail.com.