Basics of Stock Trading

An exchange is like a warehouse in which people buy and sell stocks. The traders are connected to Exchange through certified brokers. The trading will happen from 9 AM to 3.30PM and the settlement happens after the trading timeline. Brokers buy and sell stocks through an exchange, charging a commission to do so. An exchange is like a warehouse in which people buy and sell stocks. A person or computer must match each buy order to a sell order, and vice verse. SEBI was established to regulate the sale and purchase of shares and other securities in the market. SEBI has been put in place to ensure fair transaction of securities and to prevent fraud by regulating the market regularly. In order to succeed in trading you need a trading plan, in other words, you need a business plan. Here are the necessary elements of a good trading plan: Mission Statement and Objective – What is your purpose, what are you trying to achieve, and why is that important? Strategy Description – Describe your trading strategy and process. Strategic Market Analysis – Portfolio Selection, what markets are going to trade and why? Competitive and Feasibility Assessment – Who are you competing against? Do you have an edge and what is it? Psychological Analysis and Emotional Plan – Can you psychologically handle the volatility and uncertainty inherent in your strategy. Are you aware of the psychological implications of implementing your strategy? Do you have a plan to deal with your emotions? Operating Plan – What do you need to implement your strategy and how do you intend to carry out your plan? Financial Plan – How much money do you need to trade? Is it money you can afford to risk? What is your worst case scenario?