Trading in Indian stock exchanges is limited to listed securities of public limited companies, they are broadly divided into two categories, that is, specified securities (forward list) and non-specified securities (cash list). Equity shares of dividend paying, growth-oriented companies with a paid-up capital of minimum Rs.50 million and a market capitalization of minimum Rs.100 million and having above 20,000 shareholders are, usually, put in the specified group and the balance in non-specified group.
Two types of transactions can be carried out on the Indian stock exchanges, that is, a. spot delivery transactions "for delivery and payment within the time or on the date stipulated when entering into the contract which shall not be in excess of 14 days following the date of the contract": and b. forward transactions "delivery and payment can be extended by further period of 14 days each so that the in general period does not go beyond 90 days from the date of the contract". The latter is permitted only in the case of particular shares. The brokers who carry over the outstanding pay carry over charges which are generally determined by the rates of interest prevailing.
A member broker in an Indian stock exchange can act as an mediator, buy and sell securities for his clients on a commission basis and also can act as a trader or dealer as a principal, purchase and sell securities on his own account and risk.
The nature of trading on Indian Stock Exchanges are that of age old conventional style of face-to-face trading with bids and offers being made by open outcry, but, there is a great amount of effort to revise the Indian stock exchanges in the very recent times.
If you want to participate in intraday trading you should have enough savings with you. You can use 10 – 15% of your savings every day for intraday trading. If you don’t have good money backup with you a considerable loss in the market can place you in financial problem. So before entering in intraday trading make sure that you have enough savings.
There are different kinds of traders in the market such as day trader, swing trader, short term trader, long term trader, etc. before trading you need to decide what kind of trader do you want to be? A Day Trader works in the market every day and requires more research, monitoring of the market, supervision, guidance, etc. before trading you should have a clear plan about your trading pattern other strategies.
Always fix a target price while trading. If you don’t have a target price, the greediness will make you to lose the entire capital in the stock market. Stock market is such a place it can fluctuate to any level. A fair increase in the price of a particular stock may give you a feel that the price will increase further but in the very next moment it may fall down drastically.
For example; Buy Siemens at Rs.500, target Rs. 530 and stop loss is Rs. 495.
In this case you have to buy Siemens stock at Rs. 500 and sell it when it touches Rs.530 so that you can make a profit of Rs. 30. If you hold the share after it achieve the target, there is a possibility that the stock price may come dawn drastically after touching a certain limit. In this case you will lose all your profit and capital because of greediness. So fixing a target price is very important for traders.
Before trading in stock market you should fix the buy price and sell price. You should execute the trade only if the stock touches that particular level. For example, if the call is like, buy Unitech at Rs.80 target Rs. 85 and stop loss at Rs. 78. You should not buy below this price; only buy at Rs.80 or slightly higher. Because the given buy price may be the resistance price, if it breaks then share price goes up or else it may not go up. So always buy at given target price.
The language used in stock market is entirely deferent; a common man may not be able to understand the technical terms used in the field. If you want to be a successful intraday trader you should be able to understand the industry’s language. You must know what you are asking for and when you listen to the talking heads sharing their opinions on news channels, you need to know what they are talking about.
There is a learning curve in trading, until you learn to read the chart, read the mood of the market and recognize how to play. Till you learn that invest small amount in different stocks, you might make loss but experience will make you an expert and will help to generate huge profits in future.
Your first trade is the most important, but if you lose money, don't get panic. In the initial stage it is better to take the help of stock experts like IndianMoney.com. Till you learn the processes just stick to the plan with a set entrance and exit strategy.
While trading set a profit goal (Target) and a loss goal (Stop Loss) and place orders for both. If the stock price drops below a particular limit, your stop loss (loss goal) will save your capital. If you put your money in a gaining market, greed won't take over your profit because it will be triggered in your profit goal. Think if you don’t have a profit goal (target) you will keep your money in the market till the market ends in this case, if the market is coming down again you will lose all your profits.
One of the most important things that all traders should keep in mind is that do not over trade. Never put all your money in stock, most of the brokers provide margin amount but it is up to you how to make use of this margin amount. It means if you have Rs.100000 in your demat account, you can trade for more than Rs.100000. But before trading you should have a fair idea about how much you can trade, how much you can afford to lose etc.
Before buying a stock check out the buying and selling volumes. If buying volume is increasing then the stock may go up and if the selling volume is increasing the stock price may come down.
Stock trading can be a great way to make money but you should learn to read human behaviour. You can never control the market. But you have control over how you read the market, how much homework you do to reach your goals, etc. Always try to understand the market pulse.
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