The trading of shares in a stock exchange takes place through registered stock brokers,transfer agent.Stock exchange uses caution deposit to ensure counter party risk.It is necessary for a trader to know when to make long , short , long unwinding, short covering.A trade plan is essential for a trader to trade without loss in both intraday and positional trading.

  • : The trading of shares in a stock exchange takes place through registered stock brokers,transfer agent. A stock broker is a registered representative who execute orders like buying and selling of shares in market on behalf of clients. The role of stock exchange is to ensure fair trading and pricing of securities. SEBI-Securities and exchange board of India regulates Indian Market and acts as financial mediator.It aims to safeguard the interest of all parties involved in trading. Bank plays a major role in stock exchange such as underwriting of new stock issue and acts as a financial advisor.
  • : Traders are requested to pay money to brokers as caution deposit .The stock exchange will utilize caution deposit to settle the disputes and later stock brokers impose penalty or charges to traders .
  • : Trading in stock market helps to make money in return for the investment made within a short span of time. It is convenient for a trader to buy and sell shares without any intermediate . People, as a trader , can monitor their investment and they have control over the investment and can make decision to buy or sell shares any time.
  • : It is possible to buy stocks from BSE and sell it on NSE. A trader cannot buy shares in BSE and sell it on NSE in the same day. it is possible when the shares are credited in our DEMAT account after 2 days, the trader can buy and sell in any exchange .
  • : In spite of quoting higher price to buy a share , the shares are traded at best seller price which the seller prefers to sell.
  • : Orders can be placed through brokers using trading or DEMAT account. Types of orders- Market order,Limit order,Stop loss order. A day order is valid only till the end of the day.In case of pending orders , it will get cancelled automatically when the market time gets over.
  • : Traders hold long position when the value of stock is expected to raise in future. Short position is used by a trader when it is anticipated that the value of stock will decrease . Long unwinding refers to selling of positions or stocks owned for a long period to avoid bearishness. Short covering are used by traders to cover short position in order to limit losses when the stock price increases.
  • : Stock trading can be a business or gambling,which depends upon the efficiency of trader. If a person trades with adequate knowledge and discipline by calculating the risks and rewards then it is business. If a person trades without adequate knowledge and analytical skill or for excitement other than a a methodical way they are trading in a gambling style. Risk/Reward ratio helps investors manage their risk of losing money in trading.
  • : The buyers and sellers decide the stock price in the basis of demand and supply . When the demand is high, price will increase and if the demand is low, price tends to fall down.
  • : Intraday trading refers to the buying and selling of stocks and other financial instruments within the same day and all position are squared of before market closes. Positional trading is a long term trading strategy in which traders hold a position for a long period of time,( For a week, or a month,or year.)
  • : Traders short stocks anticipating that the market price will fall. This will allow a trader to buy shares to replace them at lower price. If price decreases ,he gains profit. If the price increases, the trader suffers a loss. The investors can hold short position for more than one day .
  • : A trade plan covers a brief description of strategy , the entry and exit rules and position sizing rules. It is essential to have a trade plan outline to determine the risk involved in buying and selling securities. Entry levels are price at which an investor buys or sells a security. Stop loss is used to limit the loss in a trade.
  • : The fluctuation in share price value affect a company's market capitalization.The higher the shares are priced,the more a company is worth in market value and vice versa.
1 Comment
  1. Naresh 2 months ago

    Hi,
    Good exercises, hope this helped you to recollect the workshop content.

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