Definitions used in Share market

 

Share Trading - Buying and selling of shares is called as share trading.

Open - The first price at which the stock opens in the morning when the market opens at 9:00 AM.

High - The stock price reached at the highest level through out the trading day

Low - The stock price reached the lowest level through out the trading day

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Close - The final price of the stock when the market closes for a day or the stock price at which it remains at the time of closing the market at 3:30 PM

Volume - Volume is nothing but quantity of shares.

Bid - The Buying price is called as Bid price.

Offer - The selling price is called as offer price.

Bid Quantity - The total number of shares available for buying is called as Bid Quantity.

Offer Quantity - The total number of shares available for selling is called as Offer Quantity.

Short selling - First selling and then buying (this only happens in day trading) is called as short sell or shorting of sell.

Transaction - One complete cycle of buying and selling of shares is considered as one Transaction.

Squaring off - This term is used to complete one transaction. Means if you buy then have to sell (means square off) and if you short sell then you have to buy (means square off).

Limit Order - In limit order, the buying or selling price has to be mentioned and when the share price comes to that price then the order will get executed with the price mentioned by the trader.

Market Order - When you put buy or sell price at market rate then the price get executes at the current rate of market. The market order get immediately executed at the current available price.

Stop Loss Orders - As the name indicates the stop loss orders are used to stop or limit the losses in the share market. Stop loss orders are limit price set by traders at which the order will automatically enter or exit the trade. The stop loss order is placed below the current market price of the stock to stop the loss in buy position and above the current market price to stop the loss in short sell position.

Margin Trading - Margin amount is the amount given by broker for day trading. The trading done using margin amount is called as margin trading. If you use margin amount then the trades has to be closed on the same day.

Alpha stock - A weighted measure of how much a stock has risen or fallen over a certain period, usually a year. Generally, more emphasis is placed on recent activity by assigning higher weights to it than those assigned to earlier movements. This helps to give a return figure that has a greater focus on the most current period and is a more relevant measure for short-term analysis.for the stock was up over the period, it will have a positively weighted alpha. An unchanged stock price has a small weighted alpha. A stock whose price has fallen over the period will have a negatively weighted alpha. Technical analysts use this measure to identify companies that have shown a strong trend over the past year and, more specifically, to focus their attention on companies whose momentum is building.

Beta Stock - Beta is a measure of a stock's volatility in relation to the market. By definition, the market has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market. A stock that swings more than the market over time has a beta above 1.0. If a stock moves less than the market, the stock's beta is less than 1.0. High-beta stocks are supposed to be riskier but provide a potential for higher returns; low-beta stocks pose less risk but also lower returns.

Bull Phase - when the market keeps going up it is called as Bull phase or cycle.

Bear Phase - when the market keeps going down it is called as Bear phase or cycle.

Forex Trading - Trading done in currency is called as Forex trading

Online Share Trading - Buying and selling of shares through internet during market hours is called as online share trading

Offline Share Trading - Buying and selling of shares through broker and placing orders through telephone is called as offline share trading. The offline share trading can be done during live market hours and also when the market is closed by placing order through telephone to broker. Mutual Fund - It is a financial instrument which collects money from all investor and then invests in financial instruments like stocks, bonds, etc. It is managed by fund manager.

Investor - The person investing the money in stocks for long term based on the fundamentals of the company is called as investor. Long term like 2 to 5 years or even for 10 years.

Trader - The person who trades to make quick money in share market is called as trader. The trader is not concerned about the company's fundamentals. The trader waits for any type of news which gives an opportunity to make money in a day or in a week or in a month.

Penny stock - The stock price less then Rs 1 is called as penny stock.

Large Cap stocks - Shares of those companies with a market capitalization over Rs. 1000 crores is called as large cap stocks

Mid Cap stocks - Shares of those companies with a market capitalization between Rs. 100 crores and Rs. 1000 crores is called as Mid cap stocks

Small cap stocks - Shares of those companies with a market capitalization less then Rs. 100 crores is called as Small cap stocks

Short Selling - Selling of shares and then buying them at lower price to generate profits is called as short selling.

Short selling of shares is done only during day trading.

Futures and options can also be short selled

Buy Back of shares - The buying of shares by a company from open market in order to reduce the number of shares in the market. Companies will buy back shares to increase the value of shares whenever company feel the share price is undervalued in the open market. Day trading - Buy and selling of shares in a day is called as day trading. Day trading can also be done in futures and in options.

Volatility in Share market - When the share price moves up and down without proper direction is called as volatility.

Volume - Volume is nothing but quantity in share market.

Stock Broker - The person or company authorized by stock exchange like NSE and or BSE to carry out buying and selling of shares on behalf of others.

Stock Sub Broker - The broker assigns sub broker. The sub broker also performs same tasks like broker but he communicates with broker and not with stock exchanges

About Share market

SHARE MARKET

What is share?

The public limited companies have shares.A Share represents an ownership in a Company. For example - If you buy a share of any company then you are the owner of that company. "The ownership depends on the number of shares you hold or the percentage of shares you hold". A founder, chairman or board of directors hold, mostly, majority of the shares of the Company so they are considered as major decision makers.

What is Share market?

A Share market is the place where buying and selling of shares takes place. Now days due to internet and advanced technology there is no need to present physically in exchanges like NSE and BSE but in fact the buying and selling of shares can be done from anywhere, where there is a computer with internet connection. One should have a demat and trading account, computer and internet connection and he/she can start the share trading or investing from anywhere.

Some facts about share market

i) Share market can be considered as business or job, either part time or full time job. ii) Its all about learning and experience. iii) It requires consistency in learning. iv) Requires full dedication v) Don't misunderstand that Share market will make you millionaire in one night.

What Share market is not ?

i) Overnight rich scheme or business. ii) It is not a magic or quick money maker. iii) It is not for seasonal earning but once experienced can make it seasonal activity. iv) It is not for them who totally want to depend on tips.

Day Trading..

Day trading

Paper trading Practice for successful day trading

Daily we get lots emails asking for any technique for day trading, any specific calculation for day trading, any fixed procedures to follow, I am new comer and want to earn in day trading, I want to start the day trading, I made losses in day trading please tell me how to recover and so many questions we get on day to day basis.

Broadly speaking there is no any fixed calculation or technique to earn money in day trading. Also there is no any specific technical indicator or charting with the help of which you can do successful day trading.

For successful day trading you have to combine couple of indicators to analyze the trend and strength of the market and specific stock.
So the bottom line is you need to have experience to do successful (profitable) day trading and earn money in share market.

But how it is possible to practice day trading without using actual money?

YES, it is possible using a method called "Paper Trading Practice".
By doing paper trading practice you will get experience of doing day trading without actual using your money.
So do paper trading practice and continue doing it till you start making profits and then you can plan to do actual day trading by using your money.

Paper Trading Requirements

1. You need to open the demat and trading account. Try to get very low brokerage charges account.
2. A computer with internet connection. Initially working in internet café will also do.
3. A notebook (called as paper trading practice notebook) and a pen.
4. Mind readiness ( be patient , get ready to learn, do concentration only on trading).

Day trading

Buying and selling of shares on daily basis is called day trading this is also called as Intra day trading. Whatever you buy today you have to sell it today OR whatever you sell today you have to buy it today and very importantly during market hours that is 9.55 am to 3.30 pm (Indian time).

Advantages of Day Trading

. Margin trading -

In Day trading you get margin on your balance amount means you get more leverages (amount) on your available balance amount to do day trading this concept is called margin trading. Margin trading is only possible in day trading and not in delivery trading. How much extra amount (margin) you are going to get that totally depends on your broker, or your online trading system brokers.
Some broker provides 3, 4, 5, and 6 times extra margin.
If you do margin trading then you have to square off your open trades on the same day (means if you bought shares then you have to sell and if you sold shares then you have to buy)before market time (that is 3:30 PM) finishes.
. Second important advantage is that you have to pay is less brokerage (commissions) on day trading (Intraday) as compared to delivery trading. This brokerage again depends from broker to broker (or on your online trading system).
. In day trading you can sell and then buy this is called short sell which you cant do in delivery trading. You can sell shares when prices are falling and then buy when price falls further.

Disadvantage of Day Trading

. As you are benefited to get more extra amount to trade (that is margin trading) and get more extra profit it is also equally true that you are also taking more risk of loss.
. At any cost you have to square off the open transaction before 3:30 PM (especially if you are doing margin trading) at that time the price may not be in your favor.

Day trading rules for Indian share market

It's important to do practice or paper trading before you starts actual trading. Following are the few reasons,
. Very importantly you will come to know how to place buy/sell orders, and will become familiar and perfect about using your trading system.
. You will gain confidence in yourself.
. The fear of trading will vanish. It is very important to keep fear away while doing day trading.
. You will become active to enter and exit the trade. It's vital important that you must be pretty fast to enter and exit the trade (i.e.open positions).

Day traders secrets

Never invest all your money in same sector this method is called as diversification of shares.
This will protect your money from downtrends of any particular sector as you can make money from other sector.
There are various sectors like IT, Pharmacy, Banking, Steel, Petrol and Oil, construction and infrastructure, auto etc.

Day trading tips

Prepare your Trading Plan
Strictly maintain stop loss
Control your Emotions
Don't try to get big profits in single trade
Accept and Limit Losses
Check out volumes before buying
Don't Over-Trading

Avoid Emotions in Day Trading

Have control on two greatest enemies of day trading. Fear and Greed. Please visit below link to read more about these enemies

Accept your mistakes

If you feel that your trade has went wrong then you should come out of the trade either by accepting small profit or even by accepting small loss. It happens many times with most of the traders (even with experience one) that their trades goes wrong due to change in market direction immediately and giving no time for you to cancel your trade.