Preliminaries of Stock Trading

1.Stocks can be traded through broker or by online trading.
2.Exchanges keep margin money and holds stocks with them to avoid counter party risk in case of default.
3. People trade in stocks to earn profits by buying at low price and sell at higher price or vice versa.
4. Buying a share in NSE and sell in BSE is not possible unless it is delivered.
5. If we quote at higher price to buy a stock, it matches to the nearest best selling prices and gets executed.
6. There are various of Types of Orders like Buy/Sell order,Market Order, Limit Order and Stop Loss Order.
7. Long is to Buy stock, Short is selling a stock, Long unwinding is square off of buy order and Short covering is square off of sell order.
8. Stock trading is not gambling but it is a business provided we do it with knowledge and discipline.
9. Demand and supply decides the stock price.
10. Positional trading is holding the stock for more than one day and Intraday is trading in the stock by the end of day.
11. Traders can short sell the stock without really having the stock in Intraday, but it has to be squared off by end of day.
12. Trade Plan is necessary to be a successful trader. It is plan as to what stocks to buy at what price, when to exit, its risk reward ratio etc.
13. Stock price does not affect company’s financials.