Day 2 – Basics of Stock Trading

No the stock price does not affect the monetary aspects of a company. However price reflects futuristic value of the company. Buying boosts the value as it reflects the confidence of the buyers. On the other hand selling lowers the confidence in the value of that company.
Trading in exchange takes place through stock brokers.
so for a broker to get registered in Exchange he needs to pay a caution deposit to exchange,which will be used to settle disputes in case of counter party risk.
The broker in turn has to settle up with his client.
People choose stock trading with an intention to make money by buying stocks when the stock price goes up, and selling it when it goes down.
If Stock trading or investment is done with the knowledge & discipline , then it will multiply their money significantly.
The order needs to be placed using our own DEMAT account with the details of the share price, quantity and buy or sell order.
This will be routed to exchange through broker. The order can be
1) Limit Order(Executed when the meets the mentioned price),
2) Market Order( Executed at the market Price)
3) Stop Loss Order(Executed when reached the mentioned threshold value)
The order will be valid until 3.30PM of the trading day and all the remaining orders will get cancelled after that.
If its an intraday then the validity is just within a day.
Long – Buy order
Short – Sell order
Long unwinding – Exiting the long position
Short covering – Exiting the short position
1) Expected return > Expected risk – Then it is Business.
2) Expected risk > Expected return – Then it is Gambling.