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Vineet Kumar Nair replied to the topic How option contract differ from future contract? in the forum Essentials of Trading Instruments 7 years, 2 months ago
In option contract, the buyer has the rights to either buy or sell and has no obligations but the seller has no rights and only obligations.
In future contracts, the buyer and seller; both has rights and obligations.
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Vineet Kumar Nair replied to the topic What is Spot / Cash market? in the forum Essentials of Trading Instruments 7 years, 2 months ago
Spot/cash market is a market for financial instruments such as equity market and commodities where the deals and settlements happens at the same day.
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Vineet Kumar Nair replied to the topic What is Equity market? in the forum Essentials of Trading Instruments 7 years, 2 months ago
It is the market for trading equity shares. It comes under the spot market.
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Vineet Kumar Nair replied to the topic What are derivative instruments? in the forum Essentials of Trading Instruments 7 years, 2 months ago
Derivative instruments helps to customize the trades. They are as follows:
1. Futures
2. Option – Call and Put
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Vineet Kumar Nair replied to the topic What is the role of exchange in derivative instruments? in the forum Essentials of Trading Instruments 7 years, 2 months ago
Exchange’s role is to ensure the trader’s counter party risk and the settlements.
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Vineet Kumar Nair replied to the topic Why should a trader need the futures/call/put? in the forum Essentials of Trading Instruments 7 years, 2 months ago
Trader needs the future/call/put option to customize the trade so that unlike equity market here the traders can invest a minimal amount, i.e., either margin or premium and earn maximum profit.
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Vineet Kumar Nair replied to the topic What is the Pro / Cons of Equity market from traders’ perspective? in the forum Essentials of Trading Instruments 7 years, 2 months ago
Pro – Settlement happens at the same day of trading.
Cons – 100% investment is needed to trade as well as short covering has to happen before the closing time of the stock market to avoid penalty.
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Vineet Kumar Nair replied to the topic What are Margin / MTM / Premium / Strike Price / Expiry Date / lot size? in the forum Essentials of Trading Instruments 7 years, 2 months ago
Margin – Refundable deposit paid by the traders to their respective brokers in case of future contract.
Premium – An amount paid by the buyer to the seller to sign the option contract.
MTM (Market to Market) – The increase/decrease or profit/loss occurred due to the daily price fluctuation of the current market price will be settled/realized to…[Read more]
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Vineet Kumar Nair replied to the topic What is the difference between Trading and Analysis? in the forum Basics of Stock Trading 7 years, 2 months ago
Analysis: Evaluating stocks using either fundamental or technical analysis; provides us with the knowledge and clarity to choose the valuable stocks.
Trading: Based on the analysis, the chosen stock will be traded in the stock exchange.
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Vineet Kumar Nair replied to the topic Is Stock trading is gambling or Business? How? in the forum Basics of Stock Trading 7 years, 2 months ago
Business and gambling can easily be differentiated with the concept of risk and reward. Also, it is completely related to the viewpoint of the trader.
When the expected risk is higher than the expected returns, then it is called as gambling.
When the expected return is higher than the expected risk, then it is called as business.
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Vineet Kumar Nair replied to the topic What is online trading? in the forum Basics of Stock Trading 7 years, 2 months ago
Online trading is an act of placing buy/sell orders to trade stocks through the online platform provided by the broker. The buying and selling transactions takes place in a de-materialized format.
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Vineet Kumar Nair replied to the topic How much time required to do trade? in the forum Basics of Stock Trading 7 years, 2 months ago
Once the stock analysis is done and a stock is chosen, it requires few seconds to a minute to place a trade order.
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Vineet Kumar Nair replied to the topic How to place order? Types of order? Validity of order? in the forum Basics of Stock Trading 7 years, 2 months ago
Orders can be placed through the online trading platform provided by the broker. There are two types of orders; buy order and sell order.
In the stock window, buy order will be displayed in the bid price column with the mentioned quantity of shares and sell order will be displayed in the ask price column with the mentioned quantity of…[Read more] -
Vineet Kumar Nair replied to the topic How Stock exchanges ensure the traders counter party risk? in the forum Basics of Stock Trading 7 years, 2 months ago
Exchange asks the brokers to take caution deposit from their registered traders as a measure to counter party risk.
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Vineet Kumar Nair 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, 2 months ago
In this case, the trade will execute immediately at the best seller’s price.
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Vineet Kumar Nair replied to the topic Who decide the stock price? in the forum Basics of Stock Trading 7 years, 2 months ago
Stock price is decided by the sellers and buyers as they are competing in a their respective queues, which is called a stock window.
In this window, there is a buyer side (bid price) where the highest quoted price is on the top of the queue (i.e., descending order) and
on the seller side (ask price) where the lowest quoted price is on the top o…[Read more] -
Vineet Kumar Nair replied to the topic Why do people choose stock trading? in the forum Basics of Stock Trading 7 years, 2 months ago
Trader with knowledge and discipline can earn higher returns as the average rate of annual returns in trading is higher as compared to what an individual can earn by investing the money in a fixed deposit. Also, people can work according to their own convenience of location and after becoming proficient, they can be financially independent.
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Vineet Kumar Nair 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, 2 months ago
Stock trading takes place when buying and selling of shares happens in the market by a trader.
Exchange – The above mentioned market is called the stock exchange.
Broker – Broker acts as an intermediary between the trader and the exchange.
SEBI – It is the regulatory body governing the stock exchange and its activities.
Govt. – Apex authority…[Read more]
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Vineet Kumar Nair replied to the topic What is positional trading and Intraday trading? in the forum Basics of Stock Trading 7 years, 2 months ago
When buying and selling of shares takes place on the same day before the closing of the exchange is called as intra-day trading.
When shares are bought to be held for more than a day, week or month and then sold later is called as positional trading.
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Vineet Kumar Nair replied to the topic What is long / short / long unwinding / Short Covering? in the forum Basics of Stock Trading 7 years, 2 months ago
During the bullish trend, when the share are bought, it is called as creating a long position and when these shares are sold it as called as long unwinding.
During the bearish trend, when the shares are sold (which are not owned by the trader), it is called as creating a short position and when these shares are bought back the same day before the…[Read more]
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