How to trade In stock
How to trade In stock
If you to know about how to trade in stocks you have to read this blog post. You have to know about what is a trade and how it works in the share market.
If you are interested in trade you to open a Demat account first
What is Trade?
The word "Trading" is very popular and widely used in the stock market. In Marathi, the word means "business". Whenever we buy a good or service and keep it with us for some time and when the good price of that good or service comes then we buy a good or service for the purpose of making a profit. It is then called "Trading".
Similarly, when a person buys a stock in the stock market, the main objective of that person is to make a profit by selling that stock after the price of that stock has risen. To make this profit, the whole process of buying and selling stocks is called "Trading".
Trading involves more frequent transactions such as buying and selling stocks, commodities, currency pairs, or other instruments. The goal is to get a return on investment rather than a purchase and hold. While investors are satisfied with an annual return of 10 to 15 percent, traders can get a return of 10 percent per month. By buying at a lower price and selling at a higher price in a relatively short period of time, the trade becomes profitable. The opposite is also true: trade profits can be made by selling at a higher price and buying at a lower market (known as "short selling").
While buying-selling-investors are waiting for low-profit positions, traders try to make a profit in a specified period and often use a protective stop-loss order to automatically close a lost position at a predetermined price level. Traders often use technical analysis tools such as moving averages and stochastic oscillators to find high potential trading setups.
The style of trading is the period or holding period in which stocks, commodities, or other trading instruments are purchased.
What are types of stock trading?
1.Intra Day Trading
In intra-day trading, shares are bought and sold on the same day. After the market opens, you buy the stock and sell it before the market closes. It is also known as day-trading, MIS (Margin Intraday Square off), etc.
For intraday trading, the broker provides you 20 times the amount in your trading account. This means that you can buy shares by borrowing money and sell it back the same day. This is really for the investors who have a lot of understanding of the market.
2. Scalper Trading
This is a method of share trading in which the stock is sold within 5-10 minutes of purchase. Scalper trading is done on the arrival of law or any big news of the financial world.
Scalpers, the old stalwarts of the stock market, do the trading. The risk is highest in this. Broker companies provide margins for scalper trading.
3. Swing Trading or Short Term Trading
Swing trading is done for a long time. In this, delivery is usually taken to his Demat account after purchasing the shares. The broker does not provide any margin for swing trading.
If you are trading in the stock market with the expectation of 5-10% profit according to your investment goals, then you can make money with swing trading.
4. LONG TERM Trading
When you buy a stock and keep it for a long period, it is called long-term trading. After trading in the stock market, if you remain as an investor for 6 months to a few years in stock, then it is long-term trading.
If you can buy a company's stock for one, three or five years or more. If there is rapid growth in the company's business, then you can make a very good profit in long-term trading.
The reason why we do not recommend trading is that, in our experience, many traders (especially beginners) find it easier to buy at a minimum and sell at a higher level. But, that is not the case. Trade is a highly technical activity. 90% of them lose money and exit the market in the first 2 years. It would be better to study the basics and try to invest at least for the short term than to trade day. However, this is your money and the decision is yours.
What we can do is we make a list of some suggestions based on which you can decide whether to trade or invest or both.
1.People who cannot monitor the market regularly should not be involved in stock trading. Stock trading requires constant monitoring of price, volume, trends, etc. Most of us do not have the tools to analyze all these things on a real-time basis.
2.Those who cannot actively participate in the stock market should start investing a small amount in stocks. The idea is to accumulate a small number of shares that will eventually grow into millions. Young investors may consider trading stocks for short-term profits to build their capital in the early days.
3.People who are planning to be active in the stock market should divide their available funds into two types - one for investment and the other for trading.
4.If you are nearing retirement and have not started saving, it is not a good idea to invest heavily in the stock market. However, if you have enough funds to meet your financial needs for the next five years, you can enter the stock market.
5. Short-term markets are always risky. That is why trading is riskier than investing. The market is going down and it is natural to get emotionally distracted when you see fluctuations in that price.
6. If the investment is made properly, it has a huge impact on capital growth, dividends, bonus shares, rights issues, etc. Trade does not have such advantages. Trade results depend on price movements and how well you market.
7. Short-term profit or trade profit is taxable income. Where long-term investments are tax-free.
8. Trade becomes more speculative when you try to make a profit from every price movement. Some of these price movements may be due to rumors or cunning and it is easy to get caught up in such situations. When you invest, you will spend a lot of time studying the basics and what is going on around them. That is why it is not very civilized for us to fall into such a trap.
In the investment in trade, you to basic knowledge of the stock market and you have to analyze your fundamental and technical concepts in the stock market. Trading or investing in the stock market depends on one's age, nature of income, and attitude. In any case, we must follow the basic principles supported by the technical elements. Technical Analysis and Fundamental Analysis are viewed by many polar opposites, but many market participants have achieved great success by combining the two. It is beneficial to have both Fundamental Analysis and Technical Analysis.
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