The stock exchanges are regulated by SEBI by an Act of Parliament. The stock exchanges facilitates buying and selling of shares of listed companies.
The Exchange ensures counter party risk with suitable mechanism.
Trading makes easy for a trader because the fund involvement is less than for Investing requirement.
We can buy shares from one exchange and sell in other exchange provided, we have to wait till the shares are delivered in to the Demat account.
There are many product types such as Delivery, Intra Day, Market order and stop loss order.
The long position means, ” BUY” and short position means, “SELL”
We have to undertake Trading as Business rather than Gambling.
Always undertake Trade with Knowledge and proper plan.
If trading is undertaken with out knowledge and plan, it is Gambling only, even though you earned money.
The stock price is decided by traders only.
For positional trader, he can hold the position till he wishes to hold.
For Intra day trader, he has to square off his position before 3.30 PM of the same day of trade. If not, that will end up in Auction process.
A trader can take a short position and take long position. If the short price is less than the long price, he will get his profits.
If the short price is more than the long price , he will incur a loss.
For setting up a trade, a plan is necessary. According to the plan, you have to enter the trade with target and stop loss.
Two percent of the capital may be used for trade.
The monetary aspects of the company will have a say over the share price of the company.

  • : Role of broker: buyers and sellers place orders of their choice to their respective brokers. Buyers and sellers can not trade with Exchange directly. they have to approach a broker only. Role of exchange: It will receive the buy and sell orders and match. Higher quoted price will be in first position and lower quotes will be queued one after other as far as buyer is concerned. Lower quoted price will be in first position and and the higher quotes will be queued one after other as far as seller is concerned. Role of SEBI: Sebi is a regulator of markets in a broader perspective. and he is the watch dog. Role of Government: It should facilitate estabilshment of markets and Regulators. SEBI came into picture after Harshad Mehta Scam. Parliament has enacted SEBI Act. Role of banks: Some of the banks have become Members of the exchange and facilitates trading.
  • : When orders of BUY or SELL received from Members, it is the look out of the Members to verify sufficient funds available in the trader's account and forward the same to exchange. Seller of the shares are under obligation to deliver shares to the counter party. If he fails, Exchange will proceed auction process.
  • : Trading makes Easy way of making money. Less amount is required to trade. By repeated trading, he gets profit/loss as per his trading plan
  • : It is possible to buy shares from BSE and sell it on NSE, provided he has to wait till shares are delivered to his Demat account and sell later.
  • : Whatever higher price you quote, the system will understand that the price quoted is " Buying upto that price". In that case, system will execute the trade as per current market price.
  • : We have to take note of the price movements and fix the price of the trade. Order types: 1. Market Order 2. Delivery order 3. Stop loss order 4. Intra day order
  • : Long means Buying Short means Selling Long unwinding means Selling of stocks to exit the position. Short covering means buying the stocks to square off the long position
  • : If you trade with knowledge, it is business. If you do not have knowledge and continues to trade, it is Gambling, even though you earn money by chance.
  • : Buyers and Sellers decide stock price in secondary market. In IPO, the promoters and his bankers decide the stock price.
  • : Positional trading means trader can hold his position till he wants and carry forward his position for a longer time. Intra day trading means the trader has to close his position on the same day of trade preferably before 03.30 PM.
  • : Traders can sell stock before they buy, when they think that the price will go down. When price goes down, they can buy the stock and close the position. There is no issue when the market behaves in his directional thinking. But, when market behaves against his directional thinking, ie., price moves up, he has to buy the shares at a higher price and close his position before 03.30 PM. If not, the Exchange will proceed to buy shares at the current market price and settle the issue, of course with penality.
  • : By looking at charts, we have to study the Demand and Supply patterns, take a view on either bullish or bearish and initiate trade. He has to buy the shares, when the price crosses the previous day's high and fix target and stop loss equally ( say if buy price is Rs 100, then target is at Rs 120 and stop loss is at Rs 80). For finalizing quantity of shares to be purchased, you have to order for only 2% of your capital.
  • : The stock price affects the monetary aspects of the company in a great way. Assuming that the price of the company's share goes up, it indirectly means that the company has performed well in its earnings and earned huge profits. so, naturally , the price of the company's shares will go up. On the contrary, the company's poor performance will greatly end up in losses and due to that, the share price will go down.
1 Comment
  1. Suresh Surulimuthu 8 months ago

    Good analysis !

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