The present write up delves on the basics of share market and its participants. It tries to give functional definitions to various terms of the trade like long, short, exchange, SEBI etc.
The stock market has a transparent mechanism to a larger extent. It is governed by law and the counter party risk is almost nil. The Government through its legislation created SEBI. SEBI in turn manages stock exchanges and brokers. You and I through the brokers trade stocks. For which, we open two kinds of accounts. They are trading account and DP account. Trading account is for buying and selling stocks and the DP account is to keep our holdings.
Exchange manages the buy and sell by making both the parties to meet and conduct the business through face less electronic means. Even if you want to buy a stock way above the asking price the mechanism will not permit and save those kind of discrepancies.
Stock trading may be a gambling if you simply jump in without any idea. It will be a guessing game and finally you will be trying to guess who robbed you pants down!
On the other hand, if you make an informed decision with a plan then it may called as a profession or business.
According to the intrinsic value of underlying assets, the stock prices vary. It is decided by the market participants through fair discovery system.
Have a plan before you start trading and execute the plan then monitor the execution. If it calls for change your plan till you win. Be safe than sorry.
, , Basics of Stock Trading, business, exchange, gambling, long, price, profession, short
