Basics Of Stock Trading

Prasanth Menon

14 Sep 2017

Untitled Document

Not a day goes when we don't hear of some activity from the share market. Every little political happening seems to affect the Indian stock market in some way. But very few can claim to have an understanding of the trading in shares system. Some dedicated trading apps request to simplify everything to the layman, but only a few succeed in doing so.

Maximizing quick profit:


Trading has turned out to be a brilliant and attractive way to earn profits off late. It gives an opportunity to the trader to use his wealth in a manner to maximize his profits in the short-run. Instead of getting into the usual buy-and-hold investing, the trader tries to benefit from the fluctuating price of securities.

Must-Know Rules of Trading:


Trading is not rocket science as some people enter into it and earn profits fairly quickly by application of prudence and common sense. It is rather difficult to sustain profits from it. Regular profits from trading require patience and the wherewithal to remain in the business. There are some thumb rules that traders need to keep in mind to maximize their chances of earning from share market.

 

  1. The casual trader will do himself good if he approaches it as a business.
  2. He needs to have short term as well as long term goals.
  3. He also needs to consider the capital that he is willing to invest in the said business.

Furthermore, he needs to have an idea of the commodities he will invest in. However, it goes without saying that there are no set rules for trading and they need to be molded to fit the needs of the one trading. This requires research on the part of the trader and constant changing of the game-plan. Some stock trading platforms and websites are available for the purpose.

  1. While researching on the market may cause anxiousness for traders at the time of entrance, it is an inexorable part of a successful trading plan.
  2. New traders should always keep their focus on price. That is one crucial thing every experienced trader insists on. Two things in regards should be given consideration
  3. Sometimes buying stocks of a company which is running poorly can also turn profitable as an experienced one knows when to jump the ship, so to say.
  4. These short-term profits go a long way in contributing to the overall wealth of the trader.
  5. Traders require to be fast on their feet and to be able to think pragmatically, meaning thereby, that they should stick to stocks that are traded actively. This is like a golden rule for traders at the beginner level.
  6. New traders need to build up on their understanding of the markets, through reading books, articles and following the trends to enhance their knowledge.

One of the basic mistakes made by new traders is that they try to out-think the market. But it needs to be understood that things can go astray very quickly in stock markets. Hence due diligence is necessary before jumping into the trading sea.

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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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Basics Of Stock Trading

Prasanth Menon

14 Sep 2017

Untitled Document

Not a day goes when we don't hear of some activity from the share market. Every little political happening seems to affect the Indian stock market in some way. But very few can claim to have an understanding of the trading in shares system. Some dedicated trading apps request to simplify everything to the layman, but only a few succeed in doing so.

Maximizing quick profit:


Trading has turned out to be a brilliant and attractive way to earn profits off late. It gives an opportunity to the trader to use his wealth in a manner to maximize his profits in the short-run. Instead of getting into the usual buy-and-hold investing, the trader tries to benefit from the fluctuating price of securities.

Must-Know Rules of Trading:


Trading is not rocket science as some people enter into it and earn profits fairly quickly by application of prudence and common sense. It is rather difficult to sustain profits from it. Regular profits from trading require patience and the wherewithal to remain in the business. There are some thumb rules that traders need to keep in mind to maximize their chances of earning from share market.

 

  1. The casual trader will do himself good if he approaches it as a business.
  2. He needs to have short term as well as long term goals.
  3. He also needs to consider the capital that he is willing to invest in the said business.

Furthermore, he needs to have an idea of the commodities he will invest in. However, it goes without saying that there are no set rules for trading and they need to be molded to fit the needs of the one trading. This requires research on the part of the trader and constant changing of the game-plan. Some stock trading platforms and websites are available for the purpose.

  1. While researching on the market may cause anxiousness for traders at the time of entrance, it is an inexorable part of a successful trading plan.
  2. New traders should always keep their focus on price. That is one crucial thing every experienced trader insists on. Two things in regards should be given consideration
  3. Sometimes buying stocks of a company which is running poorly can also turn profitable as an experienced one knows when to jump the ship, so to say.
  4. These short-term profits go a long way in contributing to the overall wealth of the trader.
  5. Traders require to be fast on their feet and to be able to think pragmatically, meaning thereby, that they should stick to stocks that are traded actively. This is like a golden rule for traders at the beginner level.
  6. New traders need to build up on their understanding of the markets, through reading books, articles and following the trends to enhance their knowledge.

One of the basic mistakes made by new traders is that they try to out-think the market. But it needs to be understood that things can go astray very quickly in stock markets. Hence due diligence is necessary before jumping into the trading sea.

Have Referral Code?