Stock Trading

Dear Traders,

My motive behind writing this blog is to help all those people who wants to earn from Stock Market in a sensible manner, not by speculation & wants to avoid possible severe losses. When I started my journey in Stock Market, there were thousands of videos on how to earn in a day, where to invest, which stock to buy today, however there was no-one to teach basic things to get started so that you can understand on your own. No step by step learning module to guide on Stock Market Investing or Analysis.

I have gathered the basic information required to get started in Stock Market, available on web, books, blogs, Newsletters or any other possible source and started my journey. Today, I am going to thread all those information here for you and of course, I will keep you updated on latest Stock News as well.

Earning process in Stock Market is neither an easy way nor a fun way which you can implement in you routine life and earn side by side with your current profession. It's a pure learning to Stock Market movements, analysis of stock behaviour from past, Trend & pattern Analysis, Self discipline, Time management, Risk Management & most importantly Patience to succeed in Stock Market. For which you need to dedicate time in a similar way you dedicate Time, Energy etc to your Education.

I won't teach you on how to Invest for a longer term rather I will guide you on how to Trade for a shorter period like a week or two in a sensible manner in order to learn and earn from Stock Market. Because investment is a long process which needs Company Information, New Launches, Products, Category, Peer Comparison, Industry working, Top Management Information, Balance Sheet Observation and many more.

There are three kind of experiences that you can have in Stock Market, but I suggest not to try first one ever.

1. Speculation

The very first & easiest method in stock market is Speculation. Which means buying & selling of stocks without any information of National or Global Market, Company, Stock, Trend, Pattern, Past behaviour. It's all about purchasing a stock and crossing fingers after that in the hope to earn. Sometimes, If the stock goes down, without any information on why this stock goes down, just sell it and booking loss. Vice versa if you are lucky enough and stock goes up, selling it without the information of right selling price.

So this is how speculation goes on and people books losses on stocks. I again insist you, not to try this method ever in your journey in Dalal Street.

2. Trading

Second method is Trading, which is not so easy yet viable and comprehensible. Trading can be of anything like Equities, Commodities, Bonds etc. Trading always means buying low and selling high to book profit however people use to act in opposite manner. They buy stocks when stock price is already on the higher side and when stock price fell or re-trace they sell the stock in fear of further loss. 

There are two kinds of Trading as well.

• Intra-Day Trading
• Short Term Trading

Intra Day Trading

As name specifies Trading of Stock within a Day. Generally for these type of trading, people don't takes their shares or stocks to their home after trading time which is 3:30 PM in India. They wants to sell their shares either they are gaining something or booking a loss. They wants to keep their money safe with them from the next day move of the market. By doing this way, they generally books losses. From my personal experience in Intra Day Trading, believe me, you can never build your wealth. Though you can book profit someday or few days however, in long run, eventually you will losing money. Also, by this way, you are only paying money to your share broker. Because share broker is the only person who gets money either you book profit or you book loss. He gets his brokerage on both side.

• Long Trading
• Short Trading

Long Trading

You will hear terms in the market quite often, 'Go Long' or 'Go Short' which is as follows :

'Go Long' means Long Trading which is a kind of normal buying and selling of any goods or stocks as we all know, where you first buy something (Share or Stocks in our case) & sell them once they move up in price in order to get some profit.

Short Trading

'Go Short' means Short Trading which is something special kind of Intra Day Trading provided by Stock Exchange, in which you borrow some stocks first from your broker with a point of view that the price of the stock will go down and then you buy the same quantity of stocks later in the day with lower price. The difference between Selling price & Buying price will be your profit.

This is not that much complicated. You don't need to go to your broker or write down some physical or some online application. Borrowing the stocks is automatically applied when you sell stocks which you don't own and this all happens in fraction of seconds. The policy of borrowing and brokerage may vary according your broker.

Short Term Trading

Don't confuse yourself with Short Trading & Short Term Trading. Short Trading is selling first and buying second. However in Short Term Trading, you will only buy first and sell them after 2 or more days.

Short Term Trading of shares can be from 2 days to n number of days. Generally it is considered from 15 Days to 1 Month. But you can keep your shares with you as long as you want. In this kind of trading, you need to understand the movement of the stock and act accordingly.

There are Technical Analysis & Fundamental Analysis to help you out here so that you can check the movement & trade your stock in the right direction. You will get thousands of news & tips provided by ample number of Analyst & NEWS Channels like https://www.thehindubusinessline.com/markets/todays-pick/ . Anyone can check the Target Price of that particular stock for that particular time or period however one should not rely on these tips blindly. I'm not saying these tips are fake however you will not understand the move of the market until you get the logic behind the provided Target prices. By understanding the base of Technical Analysis, you can check the price suggested by yourself and you can act according to YOUR OWN understanding rather than Buy & Sell with these tips.

I will discuss the Technical Analysis in my next blog. Which is the basic requirement for trading and if you get the chart patterns, you will surely be profitable.

Here is the link Technical Analysis Part 1