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Ramanathan Chidambaram replied to the topic How Stock exchanges ensure the traders counter party risk? in the forum Basics of Stock Trading 8 years, 8 months ago
Stock exchanges basically deal with KYC norms (Know your customer)
Moreoever the exchange will expect that the broker to take care of the KYC and then only admit him to perform trading. Hence it will deal the risk with the broker itself.
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Ramanathan Chidambaram 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 8 years, 8 months ago
If the current market price of a share is Rs.100, but the quote given say Rs.150. In this situation also the trade will execute successfully at the current market price itself.
Reason being, when an order is placed with quote price as Rs.150, then it means that, i am ready to buy the share “even at the rate of Rs.150”. As the current price is…[Read more]
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Ramanathan Chidambaram replied to the topic What is positional trading and Intraday trading? in the forum Basics of Stock Trading 8 years, 8 months ago
Positional trading – Based on the risk/reward ratio, when a trader decides to long or short a particular stock on delivery basis.
Intra day trading – <span style=”line-height: 1.5;”>Based on the risk/reward ratio, when a trader decides to either buy and sell the stock before settlement time or initially sell and buy back before settlement…[Read more]
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Ramanathan Chidambaram replied to the topic Is Stock trading is gambling or Business? How? in the forum Basics of Stock Trading 8 years, 8 months ago
Gambling – When a trader place an order, without knowing the risk/reward associated with the stock price
Business – When a trader place an order after analysing, i.e after knowing the risk/reward ratio associated with that particular stock.
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Ramanathan Chidambaram replied to the topic What is the difference between Trading and Analysis? in the forum Basics of Stock Trading 8 years, 8 months ago
Trading – Placing an order/deal and getting that executed in an exchange.
Analysis – Using the knowledge and identifying the risk/reward ratio to take a call whether to buy/sell and long/short position.
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Ramanathan Chidambaram replied to the topic Who decide the stock price? in the forum Basics of Stock Trading 8 years, 8 months ago
Buyers and sellers only decide the stock price. Based on the demand and supply of a particular stock, its value will get usually fluctuated.
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Ramanathan Chidambaram replied to the topic How much time required to do trade? in the forum Basics of Stock Trading 8 years, 8 months ago
Once the trade deal/order is placed, then our order will placed in the respective queues (buying queue or selling queue). When the quoted price is accepted by the counter trader, then our order will be executed and immediately get vanished from the queue as well.
Hence the time depends on the deal placed and deal being asked by the other trader.
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Ramanathan Chidambaram replied to the topic How to place order? Types of order? Validity of order? in the forum Basics of Stock Trading 8 years, 8 months ago
Login to client’s webpage and place an order to either buy/sell a particular share. We are in need of few information to do this task, such as company name, number of shares, long or short position (Stop loss and risk/reward ratio is also required to perform this trade with discipline)
Types of order – Buy order and sell order
Validity of the…[Read more]
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Ramanathan Chidambaram replied to the topic What is long / short / long unwinding / Short Covering? in the forum Basics of Stock Trading 8 years, 8 months ago
Long – Buying a share on delivery basis, with a plan to sell later
Short – Without even holding the share, we can buy a share (when we expect its price will fall down immediately), but we may need to ensure that to buy back the share before the settlement (this buy back act is known as “Short covering”).
Long unwinding – Selling the shares after…[Read more]
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Ramanathan Chidambaram 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 8 years, 8 months ago
Hmm yes, it is possible. NSE/BSE were just different exchanges, which will enable us to exchange our shares with other traders. So no matter where we bought the share, if it is currently owned by us, we can sell the same in any of one these two different exchanges.
Only limitation is that the corresponding company is expected to be listed in the…[Read more]
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Ramanathan Chidambaram replied to the topic What is Trade Plan? Why it is essential in the forum Basics of Stock Trading 8 years, 8 months ago
Trade plan – Apply the knowledge gained to identify the risk and rewards with respect to a particular share, then rationally take a decision to either buy or sell and the corresponding position as well. This process is knows as Trade plan.
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Ramanathan Chidambaram replied to the topic What is online trading? in the forum Basics of Stock Trading 8 years, 8 months ago
In early days, the share transactions were made manually and physical share certificates were involved. Now it is a digital world, were everything is digitized and made simpler, hence the trading itself happens through online mode.
One can place his order through online and see the response in his account, once the settlement is completed on the…[Read more]
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Ramanathan Chidambaram replied to the topic Why do people choose stock trading? in the forum Basics of Stock Trading 8 years, 8 months ago
It gives the pleasure to work from your convenient place. As you are dealing with your own money, you are the BOSS, no need to report to anyone. The returns from trading is directly equivalent to the efforts put forth by you. Eligibility criteria to perform trading is very simple, hence anyone can kick start as simple as they want.
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Ramanathan Chidambaram 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 8 years, 8 months ago
Trading – Placing an order to buy/sell a particular share and finally when that order gets executed, then we can say that a particular trading is completed.
To do the same, we are in need of the support from the below parties:
Broker – He actually owns the authority to talk to the stock exchange and execute the deal/order placed by the…[Read more]
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Ramanathan Chidambaram replied to the topic What is DEMAT a/c? in the forum Basics of Stock Market 8 years, 8 months ago
DEMAT – De materialized account. As the share certificates were digitally available, electronically it will be transferred from seller’s account to buyers account. To handle and store these certificates digitally, share trader is in need of this DEMAT account.
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Ramanathan Chidambaram replied to the topic Who are share holder, promoter, and director? What is the role and rights of them? in the forum Basics of Stock Market 8 years, 8 months ago
Share holder – Person who currently owns an equity share.
Promoter – Person who promoted the business, currently he may or may not be an owner of the same company. For ex: Narayanamurthy for Infosys, Shiv Nadar for HCL.
Director – Captain of the ship, who currently takes care of all the operations within the respective organisation.
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Ramanathan Chidambaram replied to the topic What is the role of SEBI? in the forum Basics of Stock Market 8 years, 8 months ago
SEBI – Security and exchange board of india.
It is formed by government of India, it acts as a regulator, inorder to monitor the trading that happens in the stock market.
They have formulated certain rules and thereby expect all the participants (company, buyer, seller, brokers) to adhere the rules set by them. This will ensure that no illegal…[Read more]
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Ramanathan Chidambaram replied to the topic What are the other markets? in the forum Basics of Stock Market 8 years, 8 months ago
Others markets other than equity market is commodity market and forex market
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Ramanathan Chidambaram replied to the topic Why do we need stock market? in the forum Basics of Stock Market 8 years, 8 months ago
Stock market is required, so that exchange of stocks can take place.
It is also required for a company to initially introduce their stocks and their by gaining the required capital from them.
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Ramanathan Chidambaram replied to the topic How come NSE become popular than BSE? in the forum Basics of Stock Market 8 years, 8 months ago
BSE – Bombay stock exchange, formed on July 9th 1875.
NSE – National stock exchange, formed during 1992.
Even though BSE formed before NSE, following reasons made them popular:
- introduced market derivatives (futures market) in early 2001 itself (before BSE)
- time taken to complete settlement process is very less
- Instrumental in creating…
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