Stock trading may be a gambling or business depending upon the risk taken to reward expected in a trade. Studying the trends, buyer & seller behaviours and demand & supply zones aids in developing a trade plan thereby making the stock trading a business and not gambling.

  • : Broker is an intermediary between the trader and stock exchange. The stock trading happens through the broker. When the order is placed, the order passes through the broker to the exchange and sits in the queue to hit the suitable buyer/seller. The trade takes place at the matching price for both seller and buyer, then the confirmation message comes to the trader through the broker.
  • : The brokers act as cushion to take the hit of counter party risk on behalf of stock exchanges by giving margin calls or by securing the amount from the trade for proper execution of trade. The broker ensures that the trader doesn't back out after the execution of trade by slicing out the necessary money for carrying out the intended trade.
  • : Many people jump in the stock trading believing to make money out of thin air without requiring huge capital, infrastructure and without much sweat. It has the most minimal entry barrier. But to stand out and make money through stock trading, knowledge and discipline are essential.
  • : Buying and selling across exchanges on the same day is not possible. However, its possible in case of delivery trades and its called arbitrage trade.
  • : The price listed in counter is called limiting price. Even if a higher price is offered the trade gets executed only for the best selling price i.e. the minimum price expected by the seller.
  • : An order can be placed from the app or web portal offered by the broker. Inputs like stock name or id, quantity, desired price, disclosed price (optional) should be given. Orders can be of delivery or intraday type. Orders are valid for that particular day.
  • : Long is the order placed when the price is expected to go higher i.e. money is made by buying at lower price and selling at higher price later. Short is the order place when the price to expected to fall i.e. money is made by selling at higher price and buying at lower price later. Long unwinding is an intraday order automatically executed by selling at available price at the end of the day. Short covering is an intraday order executed automatically by buying at available price at the end of the day.
  • : Stock trading can be a gambling without rational reward: risk ratio which is done without knowledge and discipline thereby making irrational decisions. Stock trading becomes a good business when done with good reward:risk ratio.
  • : Stock price is decided by the buyers and sellers.
  • : In 'intraday', trading gets completed within a day whereas in 'positional trading', trading happens at extended time frame i.e. days, weeks, months.
  • : When a trader expects a fall in stock price, he/she makes money by shorting the stocks i.e. by selling first and buying later. If stock price falls as expected during shorting, it becomes a profitable trade and vice versa.
  • : Trade plan is made by determining the entry price, target price and stoploss by assessing the market trend, buyers and sellers behaviour and entry time. Trade plan is essential to make money in long run. Without trade plan trading becomes gambling.
  • : The stock price does not affect the monetary aspects of the company unless it decides to buyback the shares from secondary market.
  • : What is IOC order?
1 Comment
  1. Naresh 3 years ago

    Hi,
    IOC orders execute immediately and cancel any unfilled portion. Actually, the Institution trader uses IOC orders to complete large orders at a particular price. So, Day order is preferable for a retail trader.

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