Stock trading is very interesting provided if it is taken as business or gambling. Trading with the analysis is key to derive the risk and reward. All other factors should be taken into consideration before starting a trade. A trader must minimize loss and maximize profit in order to gain. Market actions must be watched with price and volume inputs.

1 Comment
  1. Suresh Surulimuthu 4 years ago

    @shirun95

    I try to answer your questions.

    1) The counterparts risk is related to the default risk by either party (i.e either buyer or seller is not honouring the committment) in a contract. This is mostly associated with forward contracts, which are private contracts, where there is no mediator.
    But in the current system, where we are dealing with Futures and options contracts, the Counter-party risk is eliminated, because we are trading through recognised stock exchanges. The buyer and seller are protected against the counter party risk by clearing corporations approved by SEBI.

    2) 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.

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