Stock trading is a process where traders place their buying/selling order in an exchange via a broker.A buyer places an order mentioning the price and quantity he wants. similarly seller also places an order stating the price and quantity he wants to sell. when the buyer’s and seller’s demand and supply matches, trading happens. It is possible to buy stocks from BSE and sell it on NSE, Provided that particular stock is listed in both the exchanges.
An order is placed using a DEMAT account. The trading QUANTITY, Price, and BUY/SELL order should be mentioned.
The order can be of three types.
1) LIMIT order – the order is executed when it meets the mentioned price.
2) MARKET order – the order is executed at the current market price.
3) STOPLOSS order – the order is executed when it reaches the threshold value.
If we buy a stock expecting the price of it go higher, in order to sell it later then we create a LONG POSITION. If we sell a stock expecting the price to fall, in order to buy it later then we create a SHORT POSITION. Selling a stock that is already bought is LONG UNWINDING and buying a stock that is already sold is called SHORT COVERING. Trade plan is required to calculate the risk and returns so that we ll know when to exit safely. Trade plan includes knowing what stocks to buy/sell, technical analysis of the stock company and also calculating the stop loss so we’d know when to exit.
Basically trade plan is very important to minimise loss.
, , Basics of Stock Trading, long position, long unwinding, short, SHORT COVERIN, Trade, Trade plan, type of order
