What is an exchange?

An exchange is a mechanism through which buyers and sellers of equities are brought together. These days, this is largely electronic and done with computers.

Investors cannot, however, participate directly in the exchange and can participate only through members of the exchange, popularly referred to as brokers.

What is equity trading?

It is simply buying and selling of equities. However, unlike other commodities, equities are not traded everywhere, and are traded only in special market places called exchanges. 

General Market Advice

1. Never chase a stock.

2. Buy when markets are in the grip of panic.

3. Only buy fundamentally strong stocks, which are undervalued.

4. Buy stocks grown in top line and bottom line over the past years.

5. Invest in companies with proven management.

6. Avoid loss-making companies.

7. PE Ratio and Growth in earnings per share is the key.

8. Look for the dividend paying record.

9. Invest in stocks for sure returns.

10. Stocks have been the high yielding asset class over the past.

11. Stocks are an asset class.

12. The basic property of any asset class is to grow.

13. Buy when everyone is selling and sell when everyone buys.

14. Invest a fixed amount each month.

 

Last But not least Trust our tips and then invest to earn huge profit

 

What you MUST do

1. Get rid of the junk

Any shares you bought but no longer want to keep? If they are showing a profit, you could consider selling them. Even if they are not going to give you a substantial profit, it is time to dump them and utilize the money elsewhere if you no longer believe in them.

Similarly with a dud fund; sell the units and deploy the money in a more fruitful investment.

2. Diversify

Don't just buy stocks in one sector. Make sure you are invested in stocks of various sectors.

Also, when you look at your total equity investments, don't just look at stocks. Look at equity funds as well.

To balance your equity investments, put a portion of your investments in fixed income instruments like the Public Provident Fund, post office deposits, bonds and National Savings Certificates.

If you have none of these or very little investment in these, consider a balanced fund or a debt fund.

3. Believe in your investment

Don't invest in shares based on a tip, no matter who gives it to you.

Tread cautiously. Invest in stocks you truly believe in. Look at the fundamentals. Analyze the company and ask yourself if you want to be part of it.

Are you happy with the way a particular fund manager manages his fund and the objective of the fund? If yes, consider investing in it.

4. Stick to your strategy

If you decided you only want 60% of all your investments in equity, don't over-exceed that limit because the stock market has been delivering great returns.

Stick to your allocation. 

What you must NOT do

1. Don't panic

The market is volatile. Accept that. It will keep fluctuating. Don't panic.

If the prices of your shares have plummeted, there is no reason to want to get rid of them in a hurry. Stay invested if nothing fundamental about your company has changed.

Ditto with your mutual fund does the Net Asset Value deep dipping and then rising slightly? Hold on. Don't sell unnecessarily.

2. Don't make huge investments

When the market dips, go ahead and buy some stocks. But don't invest huge amounts. Pick up the shares in stages.

Keep some money aside and zero in on a few companies you believe in.

When the market dips --buy them. When the market dips again, , you can pick up some more. Keep buying the shares periodically.

Everyone knows that they should buy when the market has reached its lowest and sell the shares when the market peaks. But the fact remains, no one can time the market.

It is impossible for an individual to state when the share price has reached rock bottom. Instead, buy shares over a period of time; this way, you will average your costs.

Pick a few stocks and invest in them gradually.

Ditto with mutual fund Invest small amounts gradually via a Systematic Investment Plan Here, you invest a fixed amount every month into your fund and you get units allocated to you.

3. Don't chase performance

A stock does not become a good buy simply because its price has been rising phenomenally. Once investors start selling, the price will drop drastically.

Ditto with a mutual fund every fund will show a great return in the current Bull Run. That does not make it a good fund. Track the performance of the fund over a bull and bear market; only then make your choice. 

4. Don't ignore expenses

When you buy and sell shares, you will have to pay a brokerage fee and a Securities Transaction Tax. This could nip into your profits especially if you are selling for small gains (where the price of stock has risen by a few rupees).

With mutual funds, if you have already paid an entry load, then you most probably won't have to pay an exit load. Entry loads and exit loads are fees levied on the Net Asset Value (price of a unit of a fund). Entry load is levied when you buy units and an exit load when you sell them.

If you sell your shares of equity funds within a year of buying, you end up paying a short-term capital gains tax of 10% on your profit. If you sell after a year, you pay no tax (long-term capital gains tax is nil).

Helpful Points For Intra Day Trading

• Keep your volume constant e.g.: if you trade in five lots of nifty future then trade in five lots only.
• Being contrarians is very important while trading intraday.
• Stop loss is a must while trading intraday.
• Always trade in very liquid stocks i.e. which have very high volume because as entry and exit can be very fast in such stocks.
• It is not necessary that a stock which is weak today during intraday trading might be weak tomorrow also, simultaneously if a stock is strong today might not be strong tomorrow
• With the use of various tool, most of them are based on” range breakouts" or "trend following" systems. Others are based on "pivot points" and other advanced calculation. 

Intra day trading strategy

"Intra day trading strategy is defined as an overall trading strategy characterized by the regular transmission by a customer of a multiple intra day electronic orders to affect both purchase and sale in the same security or securities."
                                                        

It seemingly looks to be the simplest and the most rewarding. But in intraday trading one has to be very fast and quick and have to be on your toes always, so there are certain rules which one has to keep in mind while doing day trading in Indian stock market or in any stock exchange

Most successful day traders are those that have a system or method and stick to it over and over. There is no "magic formula" that will result in fantastic results. Most day traders that I know plan their trades around a theory or method they have faith in and continue this process over and over.

Day trading is characterized by multiple intra-day trades executed to take advantage of small price movements in stock. Stocks are generally held for minutes or hours and generally positions are closed out overnight for small profits or losses. In the day trading study, a day trader is described as "an individual who conducts intra-day trading in a focused and consistent manner with a primary goal of earning a living through the profits derived from trading strategy".
     
ADVANTAGES:

• Trading opportunities are  more frequent, if you can trade with daily chart, you will see similar trades more often on intraday chart
• You can cut losses very quickly.
• There is no overnight risk if a major piece of news hits your market after the close.

DISADVANTAGES:

• You miss longer term swings and trends
• Profit are smaller because intraday swings are shorter
• Expenses are higher because of more frequent commission or brokerage and slippage.

You must act instantly, if you stop to think you are dead. With daily chart you have a luxury of time but intraday chart demand immediate action.

You have to be fast in Trading

It seemingly looks to be the simplest and the most rewarding. But in intraday trading one has to be very fast and quick and have to be on your toes always, so there are certain rules which one has to keep in mind.

·         If index is in positive from yesterday and the share you are holding is in minus then it should be cut and if intraday trend of index is in buy then one should buy a stock in which is in plus.

·         If index is in minus then one should look to short stocks which are minus and not stocks which are in plus.

·         It is not necessary that a stock which is weak today during intraday trading might be weak tomorrow also, simultaneously if a stock is strong today might not be strong tomorrow

·         If US Markets have gone up overnight, the markets here in all probability will open strong, so one should be quite careful when buying stocks as the general psychology of public is to buy when good news is there.

·         Being contrarians is very important while trading intraday.

·         Stop loss is a must while trading intraday.

·         Always trade in very liquid stocks i.e. which have very high volume because as entry and exit can be very fast in such stocks.

·         Do papers trading before you actually start trading so that when you start making paper profits, then shift to actual trading

·         Keep your volume constant e.g.: if you trade in five lots of nifty future then trade in five lots only. This position can be increased only when you are satisfied with your trading for a month. It should not be that one day you buy five lots and next day you trade in ten lots and third day you get a loss and stop trading for two days.

·         Fear and Greed are at maximum levels while trading intraday so always have less position when you are new to intraday trading as otherwise you will be mostly under tension. 

In the world of money

In the world of money, which is a world shaped by human behavior; nobody has the foggiest notion of what will happen in the future. Mark that word - Nobody!

We are in a spectacular bear market from January 10, 2008 to till date, before that we enjoyed a secular bull market from August 2003. Now most investors are in deep red (more than the profits made in the last 3 to 5 years, including capital - wiped out)…. Bulls and bears make money, but pigs get slaughtered.

Ones very survival as a trader depends on followings. When one ignores this, is lost and doomed:

Trade money not markets- Don't blame the market for your losses. You are the reason for your losses.

Use a trading system and don't deviate from it. Follow it with rigid DISCIPLINE.

Use money management at all times and understands risk-reward ratios

Accept small losses as part of the game if you want to win don’t liquidate a winner to keep a loser. A losing position means you were wrong. Trend Followers cut their losses and let their profits run.

Stay the course so you are around for the big moves. Sustain your patience. Big movements take time to develop. Trade markets from the short side also

Don’t be overly curious about the rationale behind a move. The key to wealth in trading is simplicity. Avoid techniques you don't understand. Don't predetermine your profits. Remind yourself there is nothing new in the markets.

Trend, what is: Trends always go further than rational people expect, or even imagine. Most investors don't have the stomach for extended rallies or declines. The philosophy of not having a predetermined profit objective allows trade to continue with a trend for its full duration and then some. Trends endure for a specified time, longer than most imagine. In a very uncertain world, perhaps nothing makes more sense than simply following trends.

A Perfect Trader: a trend following person with disciplined & systematic approach in trading, psychologically more powerful than others to keep control over emotions; patience waiting for opportunity to enter the trade as well as exit much before the trend reverse. They have the quality to accept failures – to cut losing potions, when stop triggered and prepared to stick with their trade-culture through good times and bad.

 

Why trading system: The emotional reactions to trading, hope, fear, guilt, over-confidence, panic, etc., are avoided with trading systems based on price. The personal burden is lifted and trading can become objective when price is the only variable. The price already reflects all other variables filtering out subjective nuances of whoever is offering the information. Focusing on price, to the exclusion of fundamental data such as earnings, crop reports, consumer confidence and market news, allows for a scientific approach to trading. A systematic approach over time -only one way to profit in the market, compounding as time goes. Trust that time and the power of compounding- will take over if you stick with your system. Don't be so naive to expect you will get rich overnight. Remind yourself that patience is a virtue when it comes to trend following.

Dangers in Trading caused by Human Nature: psychology:

 Fearful of profits and acts too soon And Hope for a change in the forces against one

People believe what it pleases them to believe.

An Ideal Trading System: A trading system that works best for you - To choose a method that is consistent with your own personality & comfort level . . . The approach you use must be right for you; it must feel comfortable. Successful trading systems adapt to change. Trading system is designed to remain valid for years. Trading systems should ideally trade successfully at all times, in all markets, in all conditions, difficult to kill even in bad markets. Ride winners: One of the biggest mistakes a trader can make is not letting a good trade run. Trading systems will keep you in that winning trade and stops look at the price action & will lock in profits at most opportune time. Eliminate losers: A trading strategy must eliminate large losers with consistent risk management to be successful. No more guesswork: Completely automated trading removes any luck- Enter & exist with rules. One can't expect to enter a market at the precise moment a bottom is hit, nor will exit a market at the exact top, Capture the middle of the trend. Exits: is the hardest part of trading. One often exits too soon or too late. To use stop loss orders to protect profits, and to take out of losing positions. As the profit grows, move the stop to lock in more profit. Don't try to catch every move. There are often times, just sit and wait for safe to re-enter the market.

D0’s and Don’ts in Stock Trading

Every trader loses initially.

We strongly believe that every investor who comes for trading initially gives losses as he/she is unable to have control over his greed and fear. At times with all the information and luck in his favor, he makes profit, and then because of his new over confidence, trades more which results in his profit gone and also sometimes a portion of his capital gone, This cycle of fear of the losses and greed to earn more makes him initially give losses

The trader begins to make no profit no loss

Out of the total investors who enter the first stage, 80% of them finish off at the first stage only and after a year or two find that the stock market is not their cup of tea. So in the 2nd stage only the 20% investors try to break even in their trading and quite a lot of them are able to have control over their fear and greed with a result that they stop giving losses. Now these traders are ready for the 3rd stage.

The trader starts to make profits

This stage where a trader makes consistent profit i.e. he does not give loss cheque to the broker. In fact this is the stage which everyone wishes to have in the stock market. But we strongly believe that anybody who wishes to
come to the 3 rd Stage has to pass through the above 2 stages.

    *  Never risk more than 10% of your trading capital in a single trade.
    * Always use stop loss orders. (Here you should know your loss you can   give in a situation where the trade starts going against you.)
    * Never do overtrading.
    * Never let a profit run into a loss.
    * Don't enter a trade if you are unsure of the trend.
    * When in doubt, get out, and don't get in when in doubt.
    * Only trade active markets.
    * Distribute your risks equally among different markets.
    * Never limit your orders. Trade at the markets
    * Extra monies from successful trades should be placed in a separate account.
    * Never trade to scalp a profit.
    * Never average a loss.
    * Never get out of the market because you have lost patience, or get in because you are anxiously waiting.
    * Avoid taking small profits and large losses.
    * Never cancel a stop loss after you have placed it.
    * Avoid getting in and out of the market too soon.
    * Be willing to make money from both sides of the market.
    * Never buy or sell just because the price is low or high.
    * Never hedge a losing position.
    * Never change your position without a good reason.
    * Avoid trading after long periods of success or failure.
    * Don't try to guess tops or bottoms.
    * Don't follow a blind man's advice.
    * Avoid getting in wrong and out wrong; or getting in right and out wrong. This is making a double mistake.
    * When you lose don't blame it on luck.


Investors come to the stock market and buy and sell the stocks eyeing the future. The future valuations they arrive at by either calculating the

Fundamental factors on the basis of technical they take their positions.

 

In the short term it is always the technical factors that are demand and supply of the stock which gives us the directions of the movement of the stock.

Here for the reference of this side, we find that people who come here have a more short term view of the market.

 
They predict the short term movement of the market, technical analyst gives better results hence, and we follow all the standard technical analysis tools.

There are two advantages in the following technical firstly; it tells us where the share/market is moving up or down.

Secondly, technical are not bothered about the fundamentals or the news (it overrides them).

In technical we are only concerned with price charts and volumes. We believe that at any given point of time, a stock price reflects everything

Day Trading Money Management

Day trading as a business can be very profitable. It is probably the safest form of investing, as you are focusing on a small number of positions, you are not holding any positions overnight and you are able to enter and exit trades with pinpoint accuracy. However, many day traders find themselves losing due to poor day trading money management.

How Much Should You Risk

The size of your trading position is in direct proportion to the value of your portfolio. The key to day trading success is to avoid big losers. I can not tell you how many times early in my trading career, that I would be up huge over a 5-day period, only to have a big loser wipe out 50% of my gains. So, to avoid this bad habit, you should only risk a total of 1% of your portfolio on any one trade. Most traders take this rule of thumb, and just put a 1% stop loss out there and when that is hit, they just take the loss. If you have put on around 1,000 day trades or more, you know all too well that a 1% loss can happen. So, in order to avoid taking constant hits, you should allow yourself to take a 2% hit on your position, where the dollar loss from this trade will only represent 1% of your overall account value. Now that I have confused both of us, let me try to say that a little easier. You simply want the total dollar amount invested per position, to equate to 12.5% of your total margin able equity. So, if your account value is Rs100, 000 you will have Rs400, 000 dollars in margin buying power, and should use Rs50, 000 for each trade. Remember, this Rs50, 000 you use only represents 12.5% of your margin able equity. This way if you take a 2% hit, it will only be 1% of your total account value.

Stops are not meant to be hit

It really upsets me when I hear so called professionals advice new traders to set stop loss amounts. Doesn't that seem like a general rule? Trading is a game of precision, and does not operate in the realm of gray. Yes, you need a stop loss order for every trade, but it is a fail safe. In this article we have discussed the power of a 2% stop rule and overall day trading money management. But do you think you should let every losing trade hit your stop? Of course not now I am not suggesting that we all become rogue traders and trade without stops.  The minute you see that the trade is wrong, get out with small hit. Because in the end, the goal here is to see a small number of .25% or .5% losses, while your winners are in the range of 1%-3%. This is how you will win the game. Again, the 2% stop loss is for the unexpected sharp counter move, and it is not your goal to have this stop hit. You should know well before your stop is hit if you are in a bad trade.

Operate in Cash

Day trading is a cash business. The only loan you should be using is with your day trading margin buying power. Do not start or continue to day trade, if you have to take out loans, credit, or use part of your retirement to get in the game. Traders that operate with a positive cash flow and utilize day trading money management rules, have a much higher success rate and utilize day trading money management rules, have a much higher success rate than traders that start out in the red.

What is Monetory Policy

Monetary policy is the process by which the government, central bank, or monetary authority of a country controls (i) the supply of money, (ii) availability of money, and (iii) cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy. Monetary theory provides insight into how to craft optimal monetary policy.

Monetary policy is referred to as either being an expansionary policy, or a concretionary policy, where an expansionary policy increases the total supply of money in the economy, and a concretionary policy decreases the total money supply. Expansionary policy is traditionally used to combat unemployment in a recession by lowering interest rates, while concretionary policy involves raising interest rates in order to combat inflation. Monetary policy should be contrasted with fiscal policy, which refers to government borrowing, spending and taxation.

 

Day Trading Rule

Day Trading Rule #1: Never think of a trade as an investment.

When you are day trading / online trading don't decide to hold onto the stock for an investment. If your buying a trade and nothing is happening, the stock doesn't move in a few days, you should get out. Since nothing about the company has changed, don't hold onto the stock.

Day Trading Rule #2: Day trading means cutting your losses

If your day trade goes down you want to get out when it hits your stop - when the decline still amounts to a short period of time or a small dollar amount. Cut your losses quickly and get over them quickly, because the losses to come will be at lower levels and at a bigger cost. Follow your trading plan.

Day Trading Rule #3: You already have a losing trade; it's ok to take another

A loss is a loss whether it's realized or unrealized. It's better to acknowledge the loss and take another trade that makes sense.

Day Trading Rule #4: Don't expect to make money until you are out of the trade.

It's not a gain until you sell it and take the gain.

Day Trading Rule #5: Don't trade by using stock trading tips

Don't trade something because a friend told you or your overheard it on a train. Do your homework and pick a trade based on your research and indicators.

Day Trading Rule #6: Until you are out of a trade, it cannot be considered a profitable trade

The amount you have to pay in taxes is nothing compared to the amount you could lose if you don't lock in the gain on your trade.

Day Trading Rule #7: Minimize your losses

Keep tabs on potential problem stocks because one bad apple can ruin a portfolio.

Day Trading Rule #8: Just because you might have missed the last trade, don't hastily jump into the next trade

Acknowledge that you've missed out on the opportunity and to move on to the next opportunity.

Day Trading Rule #9: Don't trade by the newspaper.

They're under pressure to get the story out.

Day Trading Rule #10: Don't jump off the bridge, just because your friends did.

You are likely to lose a lot more money than you'll make. If you go long because a bunch of your friends did, or the news said so, does not mean you will make money in your trade.

Day Trading Errors

Day trading online leads to some very common mistakes made by a majority of new and intermediate traders. Understanding that you are making these mistakes is sometimes the first step to fixing day trading online problems. Take a look at our day trading online errors and identify which ones you might need to work on.

Day Trading Online Error #1: You Have No Training

Many people dive right into the day trading markets without even contemplating the risks that await them. The markets are like the food chain in the ocean. The big fish are just waiting to devour the innocent new guppies. Don't become guppies in a sea of trading sharks.

Instead, start off with a good book and understand the markets. Try out a few courses, seminars work your way up to a trading mentorship. Sometimes the best ways to learn day trading online is to sit next to someone who know how to do it. You should know what you are jumping into and be prepared to handle the day trading online markets with confidence.

Day Trading Online Error #2: You Are Too Emotional About Money

When day trading online, start to change the way you feel about money. You do not want your emotions to come into play while you are day trading online and if you are in love with every penny, you will not be able to become a success at day trading online. You must desensitize yourself to the concept of money.

When day trading online, try starting out with smaller share sizes The share sizes should be small enough so that your heart does not start pounding and your blood pressure does not rise every time the trade goes against you. Once you are comfortable with the share size, you can try a little bigger size and work your way up.

Day Trading Online Error #3: You Do Not Hold Yourself Accountable

Day trading online is tough, but often times we let ourselves off the hook when we should not. There are times when you know you should follow your trading plan, but you still don't listen. Who will tell you to do day trade otherwise?

The solution is to keep track your day trading online history by using a daily trading diary. Write down what happened, what made you lose control, or even what made you stay on task? Tracking your progress on a daily basis this will help you fix repetitive problem and avoid futures losses. It can also help you erase a little more emotion from the trading process.

Day Trading Online Error #4: You Expect To Make Money

When most day traders enter and trade they don't even want to think about the concept of losing. Your have your fingers crossed and refuse to look in the rear view mirror. Sometimes, you will use a calculator to predict how much you'll make and how you'll spend the profits, which are not yours yet. It's dangerous to anticipate profits.

Instead, when you are day trading online, enter a trade knowing that you may not be right this time. By doing so, it can be easier to acknowledge if a trade goes against you.

Day Trading Online Error #5: You Go With Any Indicators

Day trading online with the help of the latest technological tools is great but knows them first. Find the right indicators for your personality. Do you research? Maybe the squeeze indicators if right for you or maybe you trade better with the scalper.

Day Trading Online Error #6: You Do Not Know How to Go Short

Day trading online means taking long as well as short trades If you do not learn how make short trades, then you have cut yourself out of a number of profitable trades. Many day traders think that shorting is too risky. It is riskier not to know how to short. The market is a two-way street, and the person who doesn't short is missing a part of the game.

Day Trading Online Error #7: You Do Not Know Which Market Is Right For You

All day traders like to make money. Professional day traders like to make money in a specific market and match their personality. Don't spread yourself too thin by day trading markets that you don't understand.

Day Trading Online Error #8: Your Timing Is Off

Newbie day traders often make timing mistakes. Timing a trade is never an exact science, but it's important for traders to recognize that there are times when it might be prudent to lock in a profit or cut a loss.

Day Trading Online Error #9: You Are Stop Happy

Day trading online is very difficult if you are placing incorrect stops. This causes traders to get stopped out too early and prevents them from ever making a profit. How much a trader is willing to lose depends on his or her risk-tolerance.

Instead, when you are day trading online place stops according to what the market is telling you, such as support and resistance levels. When placing a stop, let the stock's behavior tell you the best stop placements.

Day Trading Online Error #10: You Do Not Calculate a Risk/Reward

Many day traders do not calculate the risk-reward ratio of a day trade before they establish a position. There are three common components of a stock's risk-reward ratio: the current price, the profit objective and stop exit price. Calculating a profit objective and a stop exit for a trade often involves many factors, such as standard deviation or technical indicators, including Fibonacci and moving averages.

Before you enter large day trading online trades, learn the basics. If you are a new trader try out trades that do not involve too much risk. Work your way up the food chain and you will be on your way to professionally day trading online.