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Arif Jani replied to the topic What is call option and PUT option? Who decide the premium? in the forum Essentials of Trading Instruments 7 years, 10 months ago
Call option is when the buyer pays a premium to get the buying rights from the seller. The buyer actually makes money when the market price goes beyond the strike price.
Put option is when the buyer pays a premium to get the selling rights to sell to the seller of the contract. The buyer actually makes money when the market price goes below the…[Read more]
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Arif Jani replied to the topic What is the role of exchange in derivative instruments? in the forum Essentials of Trading Instruments 7 years, 10 months ago
The role of exchange is to ensure any change in the strike price of the futures takes place, then it should execute the difference by collecting the difference from one party to the other party.
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Arif Jani replied to the topic How option contract differ from future contract? in the forum Essentials of Trading Instruments 7 years, 10 months ago
In option contract there are 2 types, one is call option and other is put option
In both the options the buyer has to pay a premium to the seller to get the rights. In call option the buyer gets buying rights and in the put option the buyer gets selling rights. Here the buyer has no obligation towards the seller
In futures, the buyer and…[Read more]
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Arif Jani replied to the topic What is Equity market? in the forum Essentials of Trading Instruments 7 years, 10 months ago
Equity market is where share of companies listed in the exchange are traded.
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Arif Jani replied to the topic What are the major critics against Dow Theory? How come it remains on top of any analysis? in the forum Dow Theory in Practice 7 years, 10 months ago
Dow theory cannot be used for intraday trading or weekly trading. It is used for traders who trade monthly. But Dow theory gives a clear trend regarding the stock being bullish or bearish for the next 2-3months
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Arif Jani replied to the topic What are Support and Resistance? in the forum Dow Theory in Practice 7 years, 10 months ago
Support is created by the buyers where the demand is greater than supply and we can create a long position
resistance is created by sellers where the supply is greater than demand and we can create a short position
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Arif Jani replied to the topic What is Dow Theory? in the forum Dow Theory in Practice 7 years, 10 months ago
It is a theory given by Charles H Dow to derive a technical analysis of the stock by studying the charts of the past 2 years. The identification of tops and bottoms and their sequence gives a trend in which the stock wil behave in the next 2-3 months
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Arif Jani replied to the topic When to buy and Sell using Dow Theory? in the forum Dow Theory in Practice 7 years, 10 months ago
Create a long position when there is higher bottom and higher top with good volume
create short position when there is lower top and lower bottom with good volume
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Arif Jani replied to the topic What type of Charts Used, Minimum look up period, Duration of Trend forecasting for Dow Theory? in the forum Dow Theory in Practice 7 years, 10 months ago
Line charts are used for a minimum look up period of 2 years. The duration of trend forecasting will be for next 2-3 months
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Arif Jani replied to the topic How to determine the market trend using Dow Theory? in the forum Dow Theory in Practice 7 years, 10 months ago
First we have to gather day charts for the past years, then set the charts to line graph. Identify significant tops and bottoms.
higher bottom and subsequent higher top with good volume suggests a bullish trend
lower top with lower bottom with good volume suggests a bearish trend
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Arif Jani replied to the topic Since dow theory is only to find the trend, cant we keep target and stop loss? in the forum Stock market questions and answers 7 years, 10 months ago
We can keep the stop loss but cannot keep target
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Arif Jani replied to the topic Is it possible to buy stocks from BSE and sell it on NSE? How and what is the limitation? in the forum Basics of Stock Trading 7 years, 10 months ago
It is possible to buy stocks from BSE and sell it in NSE, provided that the company is listed in both the stock exchanges. Also the shares can be sold only after t+2 days, as the exchange takes 2 days for settlement of trade.oncethe shares are in your Demat account they can be sold in the other exchange. Intraday trading cannot be done across the…[Read more]
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Arif Jani replied to the topic How Stock trading take place? – Explain the role of broker/exchange/ SEBI/ Govt/ BANK? in the forum Basics of Stock Trading 7 years, 10 months ago
Govt- it has setup SEBI to preside and regulate the induction of companies into the stock exchange and monitor the activities of the companies
Stock Exchange- an exchange where all the companies get listed and acts as a common platform for buyers and sellers to trade the shares of the companies
Broker- an agency where we can open a Demat account…[Read more]
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Arif Jani replied to the topic What is long / short / long unwinding / Short Covering? in the forum Basics of Stock Trading 7 years, 10 months ago
Long is buying a share at the current market price when we expect the price go up and sell it later for a profit. This is long unwinding.
short is selling a share at current market price when we expect the price to go down further. The buying of the shares should also be done on the same intraday trading before 3:30pm. This is called short covering
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Arif Jani replied to the topic What is positional trading and Intraday trading? in the forum Basics of Stock Trading 7 years, 10 months ago
Positional trading is buying a share and holding it for few days, or weeks or months and even years.
intraday trading is buying and selling a share on the same day
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Arif Jani replied to the topic How to place order? Types of order? Validity of order? in the forum Basics of Stock Trading 7 years, 10 months ago
we can place an order by selecting a company whose shares we intend to buy/sell. While placing an order select the buy/ sell option, followed by the quantity of shares and stop loss. The validity of the order is till 3:30 pm on the day when it was executed.
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Arif Jani replied to the topic What is the difference between Trading and Analysis? in the forum Basics of Stock Trading 7 years, 10 months ago
trading is placing buy order and sell order, where as the rational with which the order is placed is called analysis
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Arif Jani replied to the topic What is Trade Plan? Why it is essential in the forum Basics of Stock Trading 7 years, 10 months ago
Trade plan is essential as it includes the time when to enter and exit the market. This plan if executed cautiously will result in fewer loss
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Arif Jani replied to the topic What happens if I quote high price to buy a stock compared to its current market price? in the forum Basics of Stock Trading 7 years, 10 months ago
If a high price is quoted compared to its market price, then the buyer will get first preference to buy the shares from the first seller in the queue
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Arif Jani replied to the topic How much time required to do trade? in the forum Basics of Stock Trading 7 years, 10 months ago
The time required for a trade to be executed depends on the the buyer/ seller.
If a buyer agrees to buy a share at the price which the seller is expecting, then the trade can happen immediately. Or else if the buyer quotes a lower price than seller, then the buyer might need to be in the queue till he finds a seller for the price
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