The buyers and sellers are virtually meeting and trading the stocks in the stock exchanges. They are connected through the stock brokers.
To buy and sell the stocks, the trader needs to become member of the stock broker by opening trading and Demat account with them.
The trading deals are happening during the market hours and the actual settlements are taken place after market hours.
The trader can make money by buying and selling the shares when the prices are going up. Likewise, when the prices are going down, the trader can make money by selling the stock first for the higher price and then buy for lower price before market close for the day.
The stock market can be approached as business or gambling by the trader. When the potential return is higher than the potential risk, that trade is considered to be a business. Otherwise, it is called as gambling.
With good knowledge and discipline, the trader can be a good businessman. He usually takes rational decision rather than emotional decision irrespective of the result is profit or loss. By continuing the good trades he makes good money out of the market.
Stock trading can take place in secondary market only through stock brokers. Either to buy or sell the stocks one needs to approach a SEBI approved broker by becoming a member with them by opening trading & DEMAT accounts.
The trader has to put a buy / sell order with broker. All the brokers place the orders in Stock exchange. Stock exchange is responsible for settlement of all the transactions.
The money transactions for the trade are through the banks where the trader keeps the account.
SEBI Ensures the interests of investors through monitoring all the stakeholders in the system and keeping the transparency of information from companies to shareholders.
Government’s role is to Regulate the stock market’s activities through SEBI.
Stock exchanges ensure the counterparty risk through brokers. It is the responsibility of brokers to hold certain amount from his account in order to avoid counterparty risks. In case of any default, the broker can collect from that money or they can sell the shares he owns
People choose stock trading in order to make money by buying the share at lower price and sell it in higher price. There is an opportunity in stoke trading by selling the stock first and then buy it for a lower price within the trading day if the stock price is going down
Yes. It is possible for the positional trades. i.e when you hold a stock in your position bought from one exchange can be sold in another exchange. But intraday trades cannot be squared off in another exchange because the actual settlement can happen only after the market hours.
The quotes of buyers are arranged in descending order in the queue as bid prices. Likewise the quotes of sellers are arranged in ascending order in the queue as ask prices. Even If I quote high price than the best sell price (ask price), the trade will be executed for the best sell price only. Example: When the best sell price is Rs.1001 and my quote is Rs.1010, it means I want to buy anything below Rs.1010. So it will be executed for Rs.1001 only.
In order to buy or sell the share, the trader needs to communicate his intention to the stock broker. That means he has to open his trading window and select the stock, mention the quantity and price and press the buy / sell button. There are basically two types of order: Buy and Sell. The validity of the order is the end of same trading day.
Long: The fresh buying of the stock is called as Long / long position.
Short: The fresh selling of stock is called as short / short position
Long unwinding: The selling of already bought stocks is called as long unwinding.
Short covering: The buying back of stocks in order to close open short positions (square off) at a profit or loss.
Stock trading can be a gambling or business according based on how the trader approaches the market.
In the field of finance, every deal assessed by the risk and reward involved in it. If the reward is higher than the risk taken, that deal is considered to be a good business. In case the risk is higher than the reward, that deal is considered to be the gambling.
In the stock trading, when the potential return is higher than the potential risk, that trade is considered to be a business. Otherwise, it is called as gambling.
By good knowledge and discipline, the trader can be the better business man in the market.
The price of the stock is decided by the buyers and sellers and usually driven by demand and supply.
When the trader buys a stock and holds in his position for some period of time and then sell for profit / loss, this is called positional trade.
Intraday trading is about buying and selling the stocks in the same trading day.
When the stock price is anticipated to go down from the current price, the trader can make a position to sell the stock for the higher price first. Since only the deals are happening in the trading hours and the actual settlement happens only after the market hours, the trader should execute the counter position i.e buying before the market closes. When the buy price is lesser than the sell price he makes profit otherwise loss. In case, if fails to put a buy order, the broker squares off the same at end of trading hours for that the trader has to pay the charges required by the broker.
Trading plan is a careful analysis and decision by the trader on what stock to trade, whether to sell or buy, when to enter, when to exit and what quantity to trade. This is essential to plan his risk vs return and increase the probabilities of making profit.
No. The stock price does not affect the monetary aspects of the company. The company’s profit / loss is based on their revenue, expenses and thus earnings. The market prices are decided by the buyers and sellers based on their estimation on the company’s earning potential. It is between the buyers and sellers only. Company’s performance are not decided by the market value but the market value depends on the company’s performance.