Demat Account

A Demat account allows you to buy, sell and transact shares without endless paperwork and delays. Its is also safe, secure, convenient and a must for trading in share market. The Demat account reduces brokerage charges, makes pledging/hypothecation of shares easier, enables quick ownership of securities on settlement resulting in increased liquidity, avoids confusion in the ownership tittle of securities, and provides easy receipt of public issue allotments.
It helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in transit. Further, it eliminates risks associated with forgery, counterfeiting, and loss due to fire, theft or mutilation. Demat account holders can also avoid stamp duty, avoid filling up to transfer deeds, and obtain quick receipt of such benefits as stock splits and bonuses. Around 200 “ depository participants” offer the Demat account facility. A comparison of fees charged by different DPs is detailed below. But there are three distinct advantages of having a Demat account with a bank – quick processing, accessibility and online transaction. Generally, banks credit your Demat account with shares in case of purchase, or credit your savings account with the proceeds of a sale on the third day.
Banks are also advantageous because of the number of branches they have. Some banks give the option of opening a Demat account in any branch, while others restrict themselves to a selected set of branches. Some private branches also provide online access to the Demat account. So, you can check on your holdings, transactions and status of requests through the net banking facility. A broker who acts as a DP may not be able to provide these services. Opening an individual Demat account is a two step process: You approach a DP and fill up the Demat account-opening booklet. The Web sites of NSDL and CSDL list the approved DPs. You will then receive an account number and a DP ID number for the account. Quote both the numbers in all future correspondence with your DP.

How Many Accounts?
 If your shares are held in joint names, be sure to open the account in the same order of names. If A, B and C jointly hold 100 shares in a company and have three share certificates all listing A, B and C as the first, second and their holders respectively, one account will suffice.
 For different combinations of names, open separate accounts for each combination. If the three certificates are held as ABC, BAC and CBA, three different accounts are necessary.
 There is no limit to the number of accounts you can open.
 There is no limit to the number of DPs you can have accounts with.
 You can even open a multiple-sign Demat account, which can be operated by multiple holders, like a joint savings bank account.
 You can even open a Demat account even before you acquire your first security.

Documents Required
The extent of documentation required to open a Demat account may vary according to your relationship with the institution. If you plan to open a Demat account with a bank, a savings account holder has an edge over the non-account holder. In fact, banks usually offer additionally incentives to customers who open a Demat account with them. Along with the application form, your photography (with co-applicants) and proof of identity/residence/date of birth and have to be submitted. The DPs also ask for a DP-client agreement to be executed on non-judicial stamp paper.

Day Trading Commandments

Day trading stock online gives the thrill of the hunt for the convenience of an easy chair. Day trading holds potential for fast profits sometimes could be intense and risky. The most successful day traders understand the process and are willing to commit the time necessary to monitor the markets for hours to catch the slightest favorable change. Day trading combines research and instinct with fearless action. If this sounds appealing, start with the 10 commandments for the success of Day Trading.
1. Set limits on trading funds: Newcomers to day trading need to gain hands-on experience in the market. Start with a reasonable limit of money that you could afford to lose without sacrificing the car payment, since the potential for profit or loss is great.
2. Set limits on losses: Why ride a downturn hoping for a miracle upswing? As the old saying goes, “know when to cut your losses?”.
3. Manage your expectations: Sure, day traders can hit the right time and double their money in a matter of minutes. They could wither out fast. The day trading offers good profit making potential but does not come with a guarantee. Avoid betting on one stock and remain contented with gradually increasing the value of your trades. Day trading is about risk taking rather to mindless gambling.
4. Determine a trading strategy: Day trading requires keeping up with the trends and ranges, but does so on a shorter timeline. Another useful approach is to focus on specific types of business or industries to develop expertise.
5. Trading is the means, not the end: Day trading is fast paced calling for the slow down. Trade frequently just to keep trading by generating fees for online brokerage. Take your hands off the mouse and think before you click. Day traders might make three trades in a day or 12. It is not the number of trades but the result that counts.
6. Find the trends: Trend analysis shows changes that indicate an up or down move in stock prices. Since day trading is so active, you may choose to subscribe to trend reports rather than take time to develop charts.
7. Lose he emotion: The trills and chills of the day trading must be kept in check so that the but/sell decisions are based on informed choices. If you lose, let it go. Dwelling on the loss only blunts decision making for the next trade. Put your emotions within a range, neither too high nor too low.
8. Block the fear: After tanking several times it is easy to start second-guessing your day trading decisions. Successful online traders have to rise above the fear of picking another loser and either work your trading strategy or make changes to improve it.
9. Ignore hype: No matter how much a stock is touted in the tip sheets, if it does not fit your day trading strategy then it is not right for you.

Swing and Trend Trading

Swing trading has been a kind of fundamental trading in which positions are held for longer period than a single day . This is because most fundamentalists are actually swing traders since changes in corporate fundamentals generally require several days or even a week to cause sufficient price movement than renders a reasonable profit .
Swing trading is a simplified procedure . In reality , it sits in the middle of the continuum between the day trading to trend trading . A day trader will hold a stock anywhere from a few seconds to a few hours , but never beyond a day . A trend trader examines the long-term fundamental trends of a stock or index and may hold the stock for a few weeks or months . Swing traders hold a particular stock for a period of time , generally a few days or two or three weeks , which is between the extremes . They will trade the stock on the basis of intra-week or intra-month oscillations between optimism and pessimism . Swing trading takes advantage of brief price swings in strongly trending stocks to ride the momentum in the direction of trend .
 Swing trading combines the best of the two worlds – the slower pace of investing and the increased potential gains of day trading .
 Swing traders hold stocks for two days or weeks playing the general upward or downward trends .
 Swing trading is not high speed day trading . Some people call it momentum investing , because you only hold positions that are making major moves .
 You can quickly build up your equity by rolling money rapidly through short term gains .

How does Swing Trading Work ?
 The basic strategy of swing trading is to jump into a strongly trending stock after its gestation period of consolidation .
 Strongly trending stocks often make a quick move after completing correction .
 One could sell the stock between two to seven days for a 5-25 per cent move . This process could be repeated over and over again . One could play the short side by shorting stocks that fall through support levels .
 In brief , a Swing trader’s goal is to make money by capturing quick moves that stock makes in the life span , and controlling risk by proper money management techniques , simultaneously .

Advantages of Swing trading
 Swing trading works well for part time traders – especially those doing it while at work . Swing trading does not require that type of focus and dedication while its traders stay glued to computers monitors , feverishly watching minute-to-minute changes in the quote .
 Swing traders try to ride “ swings “ in the market while the traders gamble on stocks popping or falling by fraction of points . Swing traders buy fewer stocks and aim for better gains . They pay lower brokerage and have a better chance of earning larger gains , theoretically .
 Broker reaps the harvest while day trading . “ Swing traders go for the meat of the move , while a day trader just get scraps .”Furthermore , to swing trade , you need not hook up with sophisticated computers or lighting execution services . You need not have to play about extremely volatile stocks .
We believe that swing trading is a better way for the individual to attain superior investment results through the short-term trading in stock market . This trading strategy has been carefully designed for the needs of the individual investor , who does not have the resources that institutions and professional money managers may have .

How to Swing Trade ?
You need to understand what are the up or down trends to fully understand the significance of the swing trading .
Up Trend : Simply put , an up-trend is a series of higher highs and higher lows . In other words , an up trend is a series of successive rallies that extend through previous high points , interrupted by declines , which terminate above the low point of the preceding sell-off . Often , the high of the last “ swing “ in the trend will serve as the support for the next low . These areas are circled .
Down Trend : Simply put , a down trend is a series of lower highs and lower lows . In other words , a down trend is a series of successive declines that extend through previous low points , interrupted by increases , which terminate below the high point of preceding rally . Often , the low last “ swing “ in the stock’s trend will serve as the resistance for the next high .

Trend Trading
A trend is nothing , but the general direction of price of an asset or market in general . It could apply to equities , bonds , commodities and any other market , characterized by a long-term movement in the price or volume . Trend trading is one of the most effective and easy to use methods for making money in the market . The success of trend trading depends on identifying and catching the trend after it gets out of the trend no sooner it reserves . Trend trading involves taking a position in the markets with that position for weeks to months for larger than the normal gains . Trend traders or investors generally trade long-term or secular trends and are not concerned with the day to day market volatility .

Advantages of Trend Trading
 Trend trading is the fastest and most risk free way to make money in the markets . In trend trading you could identify a change of trend in the market as early as possible , take your position , ride the trend and close your position shortly after trend reverses .
 It is very possible to catch 60 to 80 percent of many intermediate term and long term market movements thereby creating wealth for yourself and your family .
 Trend trading helps in taking larger profits out of the market without watching the market or stocks on a minute-by-minute or even a day-day basis .
 Whether you are a short term day trader or a long term investor , we believe incorporating Trent Trading into your overall trading plan is a must . There are two types of trades : “ Income producing “ trades and “ Wealth building “ trades .
 Swing trading and day trading produce income , while Trend trading picks is designed to amass wealth . add this wealth building component to your trading today .

Stock Market Players

If one is interested in investing , it is valuable to know who the main players in the stock market game are . The main players in the stock market are the exchanges . Exchanges are where the sellers are matched with the buyer to both facilitate the trading and help to set the price of the stock shares . The primary exchanges are the NASDAQ , the New York Stock Exchange , all of the ECNs ( electronic communication networks ) and several other regional exchange . Not too long ago , all of the trading was done through the traditional exchanges , but today most of the stock market trading is done through NASDAQ , which uses ECNs and other firms with access to the NASDAQ to facilitate the trading .
One of the foremost and most prominent exchanges for investing in the stock market is the New York Exchange . It is also one of the largest stock market exchanges in the world . The NYSE is operated by the not-for-profit corporation New York Stock Exchange Inc, with its main building located at 18 Broad Street , at the corner of the Wall Street , in the New York City , New York , U.S.A. It is home to some 2,800 companies whose stock is valued at nearly $15 trillion in the global market capitalization . Investing your money on NYSE , unlike investing in some other more “ virtual “ exchanges , always involve face-to-face communication in a particular physical location . There is a podium /desk on the trading floor for each of the members of the stock exchange . Exchange members interested in buying and selling a particular stock on behalf of investors meet in a predetermined spot , where NYSE employee facilitates the stock price negotiations between the buyers and the sellers .
A different kind of stock market exchange arose in the later part of 20th century and has changed the landscape of the stock market . NASDAQ , which is an acronym for National Association of Securities Dealers Automated Quotations , is a stock market run by the National Association of Securities Dealers . The NASDAQ National market consists of over 3000 companies that have a national or international shareholder base , meet stringent financial requirements , and agree to specific corporate governance standards . It began trading on February 8 , 1971 as the world’s first electronic stock market . Fueled by the growth of internet stock trading , NASDAQ became the largest American stock exchange by 1999 , with over half the companies trading in United States listed . NASDAQ is made up of the NASDAQ National Market and NASDAQ SmallCap Market . Although the market is based primarily in the United States , NASDAQ has many aliances worldwide , so that today , investing in the stock market is a global activity . NASDAQ allows multiple stock market participants to trade through electronic communication networks structure . To ensure that in chaotic stock market conditions , those placing small market orders are not ignored . NASDAQ created a feature known as the Small Order Execution System .
Before the advent of internet , full service stock brokerage firms like Merryl Lynch have dominated the market . As discount brokers embraced the internet market , full service brokerage firms pretty much ignored what was happening . They didn’t feel they were really competing on price . Instead , they felt their differentiating factors were research recommendations and a relationship with a broker . They didn’t believe their customers were very concerned about price when investing . In addition , it was tough for them to figure out how to incorporate low-priced Internet services into their business models . Most full service brokers are paid commissions out of the fat transaction fees charged to the customers . If they were to provide low-cost trading , how could they provide their brokers with generous compensation ? As a result , investors have been running from full service stock brokers into the hands of firms offering cheap Internet trades . This boom in internet-based stock market investing brought many companies to the front , including such big names as E-trade , TDWaterhouse etc.

Risk Management in Stock Market

Stock market provides the same chance for investors to take their return , but so many investors could not earn enough returns and lose money , Why ? Because they do not know what is risk management and do not use it .

There are different ways and definition about risk management . Some people call it position sizing , while others call money management . Most of the books presented risk management so complicatedly that common investors unable to understand formulas for calculating the risk . But in this user-friendly handbook, we describe it simple and practical as possible .
Risk management is the process of measuring , or assessing risk and then developing the strategies to manage the risk , while attempting to maximize the returns . Typically involves utilizing a variety of trading techniques , model and financial analysis . The potential return from any investment is generally depending to the amount of the risk the investor is willing to assume .
Investors will not take on greater risks without the possibility of higher earnings . This is called the risk premium . In general , the greater the risk , the higher the potential return ; the lower the risk , the lower the expected return .
Different markets have varies risks . Their volatility varies for example risk in the stock market , and currency market is not the same . Also, each stock in the stock market has its own risk , because the volatility is varies. So, if a stock has more volatility you should invest less money in it . Risk management is a must for stock trading of any kind


Common Types Of Risk :

There are several main types of risk , and investors should understand them well because some affect certain investments more than others . The two common type of risks that apply to almost all investments are :

Market Risk : The chance that financial markets in general may rise or fall in value .

Inflation Risk : May be the most important factor for long – term investors to consider , because inflation is cumulative , and it compounds just as interest does .You can’t control the inflation risk , but with a good strategy you can manage and control the affect of market risk on your stocks.

A professional trader always tries to understand and control protfolio risk . Before entering into any trade , good traders first think about how much risk to take and how much risk exposure comes with a particular trade selection . Only then do they allow themselves to think about how much profit they stand to make .
Prudent investors always close their position and exposure if they determine that a protfolio caries too much risk .


Risk Management For a Trade :


Before you decide to trade consider to these fundamental principles .

 Before you trade a stock , know how much you are willing to lose .
 Check the stock to be sufficiently liquid , could you buy or sell promptly ?
 Determine the cut-loss level before trading .
 Determine your profit target ( take-profit-level ).
 Buy the stock only at an acceptable price level . Use a limit order when you buy a stock .
 Immediately after the trade has been confirmed , enter the stop-loss-at-market order at your predetermined stop-loss level .
 Take profit when the trade reaches your profit targets .

Protfolio Risk Management :

Your protfolio risk will be well under control and you manage your protfolio risk actively , by managing the risk of each trade . Follow the pointers to control your protfolio risk management

 Determine your overall cut-loss level . Usually your protfolio should not lose more than 10 percent of your capital .
 Diversity your investment in at least six or more different stocks .
 Know your overall risk tolerance before building up the protfolio.
 Act quickly when you see your risk limits exceeded .
 Close out the entire protfolio if it losses to your overall stop-loss level.

Returns with Low Risk

Delivery based trading means buying shares and holding them for a certain period of time is called delivery based trading . The shares you bought will be in you Demat account . Once you take the delivery of shares you could hold them as long as you want . You must have sufficient funds in your account . To take delivery . You need not get any margin to buy shares in delivery . Study the following points carefully and get the best returns in a short period of time
Basically , Delivery based trading can be minimum one week , one month or a couple of months . How long you hold your scrips and shares will depend on other technical indicators and averages .

How to select best scrips ?
There are thousand of shares and stocks, which one is best for delivery trading and which one will give maximum profit in short period of time . Have a look on the selection criteria points :
1. Sector-50 percent of stocks rise and fall is directly related to the strengths and the weakness of its industry group .
2. Never lose more than 1 – 2 percent of your total mount on any trade .
3. Promoters holding more than 40 percent indicate safety for retail investors .
4. Liquidity – buying and selling of shares minimum one litre per day .

Consistent Earnings : Generating profit consistently year after year or quarter after quarter .

EPS : Earning per share is calculated by taking a company’s net earning and dividing by the numbers of outstanding shares of the stock the company has .

P/E Ratio : EPS is a great way to compare earnings across companies , but it does not tell you anything about how the market values the stock . That is why fundamental analysis use the P/E ratio , to figure out how much the market is willing to pay for a company’s earnings. Higher the PE ratio , more people are convinced to pay high for that share expecting higher growth in the coming future .

Dividend Yield : It is calculated by taking the amount of dividends paid per share over the course of a year and dividing by the stock price . Its percentage return a company pays out to its shareholder in the form of dividends . The higher the percentage the better will be the return .

Price/Book Ratio : The higher the ratio the higher the price the market is willing to pay for the company above its assets . It is more useful to value investor than the growth investor .

Price/Sales Ratio : As with earning a book value , you could find out how the market is valuing a company by comparing the company’s price to its annual sales . Lower Price/Sales are usually thought to be the better investment since their sales are priced cheaply . P/S ratios are usually used for only for unprofitable companies , since such companies don’t have a P/E ratio .

Returns on Equity : It is used as a general indication of the company’s efficiency , in other words , how much profit it is able to generate given the resources provided by the stock holders . Investors usually look for the companies with ROE that are high and growing .

Debt to Equity Ratio : This should not be more than 1 , and less than 1 indicates the company has very less debt . This is very important during market down trend as the company has to pay lots of interest ratio beside low profitability . So its good sign , if company has less debt and that is debt equity ratio.

Investment Tips in Delivery Based Trading :
1. Buy shares of different companies : Don’t ever try to pull all your money in a single share . Try to get shares of the multiple companies and if possible from different sectors . You will always get benefited , by investing in companies of different sectors , because we never know which sector will have good news and which sector will have a bad news . “ Market always reacts for news “

2. Be Patient : When you buy shares , they may go down . In share market its general practice that shares go up and down . If they go down than don’t panic and sell your shares . Most of the investors wait till their shares come to their buying level and then sell , but generally they forget that is the actual buying level of shares and from this level onwards the share price will starting moving upwards .

3. Hold as long as you want : If you buy shares and if it goes down , then you can hold them and sell them only when your shares go above your buy price .

4. Loan : Now – a – days , some banks and some financial firms provide loans on your shares . So you can utilize your shares in your bad times .

5. Dividend : If companies make good profit , then they may declare dividend per share . If you hold shares of such companies then you may get dividend per share .

6. Good Returns : Now – a – days if you keep your money in banks then you get maximum 9 or 9.5 percent per year . If you invest in shares of good growing companies then you can earn minimum 15 percent returns per year . Some companies give 30 to 40 percent returns per year . Best share market returns are based on delivery based trading for long term .

7. Bonus Share : If the company makes extra ordinary profit then company may declare bonus shares . Bonus shares like 1:1 means if you have one share then you may get another free . So if you have delivery of such share then you are liable for such bonus shares .

Financial Planing for your Share returns : It is another important point to consider , if you hold more than one share then it is always advisable to prepare technical document for all your shares . You ca prepare excel or word sheet on your computer or you can write in your notebook .
In this manner you will come to know what is happening about your share and you can decide when to sell or till what period to hold . This system is called portfolio maintaining .
Even you can keep a close watch on share which you are planning to buy and if you get proper signal or feel comfortable with its results , then you can jump and buy that share .

Quick Bucks

Many people become very rich in the commodity markets . It is one of a few investment areas where an individual with limited capital can make an extraordinary profits in a relatively short period of time .
Nevertheless because most people lose money , commodity trading has a bad reputation as being too risky for the average individual . The truth is that commodity trading is only as risky as u want to make it .
Those who treat trading as a get-rich-quick scheme are likely to lose because they have to take big risks . If you act prudently , treat your trading like your business instead of a giant casino gambling and are willing to settle for a reasonable return , the risks are acceptable . The probability of success is excellent . The process of trading commodities is also known as futures trading . Unlike other kinds of investments , such as stocks and bonds , when you trade futures , you do not actually buy anything or own anything . You are speculating on the future direction of the price in the commodity you are trading . This is like a bet on future price direction . The terms “ buy “ and “ sell “ merely indicate the direction you expect future prices will take .
If for instance , you were speculating in corn , you would buy futures contract if you thought the price would be going up in the future . You would sell a futures contract if you thought the price would go down . For every trade , there is always a buyer and a seller . Neither person has to own a corn to participate . He must only deposit sufficient capital with a brokerage firm to insure that he will be able to pay the losses if his trade lose money . In addition to speculators , both the commodity’s commercial producers and commercial consumers also participate . The principal economic purpose of the future markets is for these commercial participants to eliminate their risks from changing prices .
On one side of a transaction may be a producer like a farmer . He has a field full of corn growing on his farm . It won’t be ready for harvest for another three months . If he is worried about the price going down during that time , he can sell future contracts equivalent to the size of his crop and deliver his corn to fulfil his obligation under the contract . Regardless of how the price of the corn changes in the three months until his crop will be ready for delivery , he is guaranteed to be paid the current price . On the other side of the transaction might be a producer such as a cereal manufacturer who needs to buy lots of corn . The manufacturer such as Kellogg g, may be concerned that in the next three months the price of corn will go up , and it will have to pay more than the current price . To protect against this , Kellogg can buy future contracts at the current price . In three months Kellogg can fulfil its obligations under the contracts by taking delivery of the corn . This guarantees the regardless of how the price moves in the next three months , Kellogg will pay no more than the current price for its corn .
In addition to agricultural commodities , there are futures for financial instruments and intangibles such as currencies , bonds and stock market indexes . Each future market has producers and consumers who need to hedge their risk from the future price changes . The speculators , who did not actually deal in the physical commodities , are there to provide liquidity . This maintains an orderly market where price changes from one trade to the next are small . Rather than taking delivery or making delivery , the speculator merely offsets his position at some time before the date set for future delivery . If the price has moved in the right direction , he will profit . If not , he will lose .
In addition to reducing the costs of production , marketing and processing , future markets provide continuos , accurate , well-publicized price information and continuos liquid markets . Futures trading is beneficial to the public which ultimately consumes the goods traded in the future markets . Without the speculator futures markets could not function .Since the speculators perform the valuable functions of providing liquidity and assuming the risk of the price fluctuation , they can earn substantial returns . The potentially large profits are available precisely because there is also a risk of substantial loss .

As An Investment Vehicle :

There are many inherent advantages of commodity futures as an investment vehicle investment over other alternatives such as savings account , stocks , bonds , options , real estate and collectibles . The primary attraction , of course , is the potential for the large profits in a short period of time . The reason that future trading can be so profitable is leverage . While profits can be large in commodity trading , it is not easy to make consistently correct decisions about what and when to buy and sell .Commodity speculation offers an important advantage over such illiquid vehicles as real estate and collectibles . The balance in your account is always available If you maintain sufficient margin , you can even spend your current profit on a trade without closing out the position . With stocks , bonds and real estate , you can’t spend your gains until you actually sell the investment .
As you will see , commodity trading is not particularly complicated . Unlike the stock market where there are over ten thousand potential stocks and mutual funds , there are only about forty viable future markets to trade . Those markets cover the gamut of market sectors , however o you can diversify throughout important segments of the world economy . In futures trading , it is as easy to sell as it is to buy . By choosing correctly , you can make money whether prices go up or down . Therefore , trading a diversified portfolio of the futures markets offers the opportunity to profit from any potential economic scenario . Regardless of whether we have inflation or deflation , boom or depression , hurricanes droughts, famines or freezes, there is always the potential for profit trading commodities.
There are even tax advantages to making your money from futures trading. Regardless of the actual holding period , commodity profits are automatically taxed as sixty percent long-term capital gains and forty percent short-term capital gains . The current maximum capital gains rate is thirty-three percent , somewhat less than maximum rate of ordinary income . To extent that capital gains tax rates are reduced in the future , commodity traders will benefit . If the distinction is re-establishes so that the taxes on long-term gains are lower than on short-term gains , commodity traders will benefit .

Online Trading

When it comes to investment , each move and each portfolio according to the market conditions and risk bearing capability is stock investment . Buying stocks online is not a new concept . Every person can afford it . Profitable buy is the basic thing that the stock world actually depends on . Once the buy is well thought of , it is positively going to give better returns . Making the decision to buy certain stock is not easy ; however, the following steps may provide you a rough layout to be followed .

Research and Education : Day trading or stock investment is all about keeping alert on the news and having a clear mind , though few people knew about it . It is recommended to get you well educated about the twists and turns of the stock market . Studying past moves and historic analysis may definitely help . Experiences are also a great help . Once you go through thorough research work , brace yourself to get real investment plans .

Get a System work for you : The meaning of system here is to get yourself a broker or brokerage firm through which you can have access to stock exchange . Make a choice , with the amount of the brokerages you want to work with and the facilities you demand . Never count upon the cheapest service as they may not serve you the services that you are in need of . You must always evaluate the worth of services you are demanding .

Decide on the Rules : It is a fact that every market has its own set of rules and notions of trade . You have to work on the buying and selling rules of stock market , watch the market and go for paper trade . Paper trade is the theoretical buying and selling of the stocks that tends you prove your profitability skills before you actually enter to some dine. It gathers you better speculation skills and gets you experience , through theoretical .

Get through the Formalities of the Broker : There is some paperwork that you have to work on to get the real trade . Get yourself signed to the firm registered with one or more stock exchanges . Proceed with the initial deposits that are to be made for trading accounts and get the needed softwares installed to your PC for online trading .

Maintain a Balanced Portfolio : Be prepared for certain setbacks and losses . However , consistency and break-free moves get you to maintain a balanced portfolio that is beneficial in long run . Also , steady trading is considered to be more meaningful rather than flying in the air right from the start . Inexperienced flight may get you nowhere in the long run . Hence , balancing your trading speed you’re your portfolio is considered to be wise .

Seek for all the opportunities including Index Funds : Diversifying your investments is the best way to avoid the unbearable losses . It tends to integrate your risks and thus serves as a benefit . Also, index funds are a good option to invest in . They provide a balanced , low-cost way of investing and have consistent long-term gains . Hence , a wise selection of stock investment option is considered admirable and well thought decision while investing in stocks . Seeking all opportunities provides you a better range of choices .Online trading is gaining popularity at a rapid pace . Number of known and unknown companies , firms and financial institutions are providing online trading facilities , You only need to register yourself with one of it .

Is Trading through Internet Safe ?

The safety of transactions on internet depends on the encryption system used . The better this transaction system , the more difficult it is for any person to hack this site . Internationally , the best system available today is 128-bit encryption . Secondly, you too can ensure the safety of the transaction online . You normally get a secured user id and password , the secrecy of which is to entirely maintained by you . Thirdly , if the transaction system requires no manual intervention you further improve the safety in the transaction . Among Indians sites , very few are fully integrated online trading sites . This enables the elimination of the possibility of any manual intervention , which means orders are directly sent to the stock exchange ensuring that you get the best and the right price .

What about the Security of My Money , Demat Shares and Transaction Documents ?

In systems where the broking , banking and demat accounts are completely integrated , your money remains in your own bank account , and does not get transferred to the broker’s pool account. The experience of trading through Internet depends a great deal on the type of product offered by the site . Say for example , one of the issues bothering you may be getting tired of the paperwork involved after every trade , in writing cheques . You would open then seek a system that eliminates these processes . In online trading sites the greater the back-end integration of the system , the greater the amount of work the sites do for you , therefore greater the convenience available to you .
In big financial institutions your broking account , bank account and the Demat account are linkee electronically . So when you punch in a buy or a sell order , the system checks the funds / shares availability and automatically credits /debits the account once the order is executed by the exchange .

But I am not comfortable with Internet , or with Finance , how can Online Trading be easy for me ?

Contrary to common perceptions , trading through Internet does not require any expertise in working on the computer , or any special financial skills . You could try the demo of online trading sites to find out why others like you , with little or no knowledge about Internet or finance , have switched on to online trading . Or you could attend the demonstrations sessions held by such websites in your city .

Is Trading through Internet a costly affair ?

The convenience provided by online trading is even then worth the costs involved . And online trading sites are not that costly . For example , a trader can trade shares on margin at rates as low as 0.10% and if one wishes to trade in cash , then rates applicable are as low as 0.4% However , it is important to compare various online trading sites on brokerage rates , inclusive of all sub-charges .


Discount stockbrokers allow you the flexibility of creating your own portfolio , sharing your money between mutual funds , bonds, stocks options and exchange traded funds . Most of the companies that are into discount brokering . allow options of banking like checking and savings account , credit cards certificate of deposits and mortgages and money markets accounts . Such companies offer you options of the best online trading .

Online And Offline

The introduction of the Internet has surprisingly changed our way of life as a society . It has defined the way we o business and the way we correspond . Internet has opened many opportunities for internet trading . The financial industry revolves around internet . Every thing is just a few clicks away . This makes online trading most convenient . But there are still investors who prefer the old fashion of offline trading and mainly prefer offline trading for security reasons .
Internet has introduced a way for consumers to manage their money online . Not to mention , internet has transformed the way investment companies operate their business and has made it easy for private investors to gain straight access to a range of different markets and online tools that were at one point reserved by the use of investment professionals . Consumer investing and online trading has dramatically changed over last decade . Online trading dynamically continues to be redefined . Services has expanded to include integrated management of additional financial accounts . Not to mention , it has subsequently expanded in conjunction with ground – breaking improvements to the traditional trading interface , such as telephone interface systems .
Of course , online trading has many pros . There are several wonderful reasons to invest online and consider online trading .
1. Money saving opportunities : The amount of money you save depends primarily on the online brokerage firm that you choose . No two firms are same . There may be different regulations , similar to bank regulations . There are minimum deposits required that must be maintained . As mentioned above , this will depend on th online brokerage firm .
2. Instant online access : You can gain instant access to your account , the value of your portfolio updates immediately before your eyes .
3. Enter online trades at anytime : You can enter online trades at any time from anywhere . This is very convenient if you live in a different time zone than the country you are trading in . Not to mention , it is especially fit for the investors with the busy schedules .
4. With online trading you are in charge : You are in control of your investments . No sales pitches and no haste . You decide where to invest your money .
Nevertheless , with all the convenience of online trading there are still investors who prefer the old fashion way of offline trading . Offline trading has lost some popularity but it is still the main form of investing . Offline trading offers many benefits as well .
1. The one benefit that an investor appreciates the most is that they are not alone when making investment decisions .
2. There are experienced and professional brokerage companies that handle their investments for them .
3. Investors are not faced with the challenge of making these vital investment decisions , especially if they do not have the experience necessary to make the appropriate investments .
4. Also , there is someone there to answer any questions that may cause concerns .
Not to mention , with offline trading mistakes are less likely to take place . No one wants to throw their money away or stand by and watch someone else thrown their money away . It may be wise to hire a professional to assist you in making the correct investment decisions if you feel you lack the knowledge necessary .

Money From Your Fund

Examine Sector Weightings and the Fund’s Concentration : The funds that have large stakes in just one or two sectors are expected be more volatile than the evenly diversified funds . A concentrated portfolio may also get more successful if its stocks are performing better . You may add a concentrated fund in your portfolio but mostly the concentration should be in a diversified fund which is more predictable . Invest in a few funds and develop a plan : But it does not mean you should invest only in one fund . Even though the funds are diversified , many funds go though a few years of poor performance . When you invest only in one fund , you might lose heavily . On the other hand , investing in too many funds may lead to duplication of many securities and a portfolio with no focus . For long term financial goals , equities are the best option .

Keep it Simple :

To keep the selection of the funds simple , you should stick with well diversified and well established equity funds , an index fund for equity exposure and a floating rate bond fund for fixed income exposure . For long term perspective , equities are the best performing asset class. One should normally stay away from speciality and sector funds because they have a huge risk associated .

Know Your Portfolio & Ignore the hot stocks and funds:

Avoid going for impulsive purchase. It is wise to invest in a fund that invests in stocks that make up an index. This way , you will do no worse than the market. Since , in the long run , markets have a tendency to go up , even your investment will move the same way . But in case you are a little more active , you can go for established ‘value’ funds that invest in undervalued securities .

Invest Regularly :

Investing a little bit of more money every month is the surest way to reduce the risk of investing . Investing on a regular basis is the key to success . Irrespective of the fund you choose , the reality is that its value will keep going up and down . One can expect a reasonable price in long term by investing on a regular basis .

Diversification is suitable for many Investors :

It is generally true that stocks perform better than any other liquid investment . So, in case of long term horizon and if you are comfortable with the risks associated with the stock market , you can think of investing in the stock funds . But in case you are slightly conservative , you may think of investing in different asset classes such as stocks , bonds , etc. The key challenge is to chose the right fund .

Assess Performance Approximately :

Past performance is not necessarily a good indicator of future results and this fact should be kept in mind every time one considers investing in fund . Avoid investing in a concentrated fund and focusing on short term returns . Generally while choosing a fund , one should look for above average performance over a period of time .

Benefits of Investing in Mutual Funds :

Mutual funds offer several advantages to the investors :
Affordable : Almost everyone can buy mutual funds . Mutual Funds generally provide an opportunity to invest with less funds as compared to other avenues in the capita market . Even the ancillary fee which one has to pay in the form of brokerages , custodian , etc. is lower than other options and is directly linked to the performance of the scheme .

History Of Stock Market

IN THE USA : History of stock market trading in the United States can be traced back to over 200 years ago . Then , the colonial government decided to finance the war by selling bonds , government notes promising to pay out at profit at a later date . At around the same time , private banks began to raise money by issuing stocks , or shares of the company to raise their own money . This was a new market , and a new form of investing money , and a great scheme for the rich to get richer . A little further on the history timeline , more specifically in 1792 , a meeting of twenty four large merchants resulted into a creation of a market known as the New York Stock Exchange . At the meeting , the merchants agreed to meet daily on Wall Street to daily stocks and Bonds .
Further in history , in the mid 1800’s , the United States was experiencing rapid growth . Companies needed funds to assist in expansion required to meet the new demand . Companies also realized that investors would be interested in buying stock i.e., partial ownership in the company . History has shown that stocks have facilitated the expansion of the companies and the great potential of the recently founded stock market was becoming increasingly apparent to both the investors and the companies .
By 1900 , millions of dollars worth of stocks were traded on the street market . In 1921 , after twenty years of street trading , the stock market moved indoors . History brought us the Industrial Revolution , which also played a role in changing the face of the market . New form of investing began to emerge when people started to realize that profits could be made by re-selling the stock to others who saw a value in a company . This was a beginning of the secondary market , known before , because it was now fueled by highly subjective speculation about the company’s future .
This was the pretext for the appearance of such stock market giants as NYSE . History books tells us that the reason why NYSE is so highly regarded among stock markets is that they only trade in the very large and well-established companies . I acted as a more stable investment alternative for people interested in throwing their capital into the stock market arena . The smaller companies making up the stock market formed into what eventually became the American Stock Exchange . Contrary to the 80-year old history , today NYSE , AMEX and hundreds of other exchange markets make a significant contribution to the national and global economy .
The growth in the number of the market participants led the government to decide that more regulation of the stock market was needed to protect those investing in the stock . History was made in 1934 , when following the Great Crash , Congress passed the Securities and the Exchange Act . This act formed the securities and the Exchange Commission , just like SEBI in India , which through the act and succeeding amendments , regulates the American Stock market with the help of the exchanges . It also includes overseeing the requirements for a company to issue a stock shares to the public and ensures that the company offers relevant information to potential investors . SEC also oversees the daily actions of market exchanges and how they trade the securities offered .
Although historically , investing in the stocks was a “ hobby “ for the rich , an average person too soon came to realize the value of the investment as compared to traditional assets like land or a house .

IN INDIA : The working of the stock exchanges in India started in 1875 . BSE is the oldest stock market in India . The history of the Indian stock trading starts with 318 persons taking the membership in the Native Share and Stock Brokers Association , which we now know by the name of Bombay Stock Exchange , or BSE in short . In 1965 , BSE got permanent recognition from the Government of India . National Stock Exchange comes second to BSE in terms of popularity . BSE and NSE represent themselves as synonyms of Indian stock market . The history of Indian stock market is almost the same as the history of BSE .
Many foreign institutional investors are investing in Indian stock markets on a very large scale . The liberal economic policies pursued by successive Governments attracted foreign institutional investors in a large scale .
India , after United States hosts the largest number of listed companies . Global investors now ardently seek India as their preferred location for investment . Once viewed with skepticism stock market now appeals to middle class Indian also . Many Indians working in the foreign countries now divert their savings to stocks . This recent phenomena is the result of opening up of online trading and diminished interest rates from the banks . The stockbrokers based in India are opening offices in different countries mainly to cater the needs of Non-Resident Indians . The time factor also works for the NRIs . They can buy or sell a stock online after returning from their work places .

Golden Tips in Stock Market

1. Buy low-sell high . As simple as this concept appears to be , the vast majority of investors do exact opposite of it . Your ability to consistently buy low and sell high , will determine the success , or failure , of your investments . Your rate of return is determined 100% by when you enter the stock market .
2. The stock market is always right and price is the only reality trading . If you want to make money in any market , you need to mirror what market is doing . If the market is going down and you are long , the market is right and you are wrong . If the stock market is going up and you are short , the market is right and you are wrong .
3. Every market or stock that goes up will go down and most market or stocks that have gone down , will go up . The more extreme the move up or down, the more extreme the movement in the opposite direction once the trend changes . This is also known as “ the trend always changes rule .”
4. If you are looking for “ reasons “ that stocks or markets make large directional moves , you will probably never known for certain . Since we are dealing with perception of markets not-necessarily reality , you are wasting your time looking for the many reasons markets move .
A huge mistake most investors make is assuming that stock markets are rational or that they are capable of ascertaining why markets do anything . To make a profit market trading , it is only necessary to know that markets are moving - –not why they are moving . Stock market winners only care about direction and duration , while market losers are obsessed with the whys .
5 Stock markets generally move in advance of news or supportive fundamentals – sometimes months in
Advance . If you wait to invest until it is totally clear to you why a stock or market is moving , you have to assume that others have done the same thing and you may be too late .
You need to get positioned before the largest directional trend moves takes place . The market reaction to good or bad news in a bull market will be positive more often than not . The market reaction to good or bad news in a bear market will be negative more often than not .
6. The trend is you friend . Since the trend is the basis of all your profits , we need long term trends to
make sizable money . The key is ti know when to get abroad a trend and stick with it for a long time
period to maximize your profits . Contrary to the short term perspective of most investors today, all the big money is made by catching large market moves – not by day trading or short term investing .
7. You must let your profits run and cut your losses quickly if you are to have any chance of being
successful . Trading discipline is not a sufficient condition to make money in the markets , but it is a
necessary condition . If you do not practice highly disciplined trading , you will not make money
over the long term . This is a stock trading “ system “ in itself .
8. The Efficient Market Hypothesis is fallacious and is actually a derivative of the perfect competition
Model of capitalism . The Efficient Market Hypothesis at root shares many of the same false premises as the perfect competition paradigm as described by a well known economist .
The perfect competition model is not based on anything that exists on this earth . Consistently profitable professional traders simply have better information – and they act on it . Most non professionals trade strictly on emotions , and lose much more money than they earn .
The combination of superior information for some investors and the usual panic as losses mount caused by buying high and selling low for others , creates inefficient markets.
9. Traditional technical and fundamental analysis alone may not enable you to consistently make money
In markets . Successful market timing is possible but not with the tools of analysis that most people employ .
If you eliminate optimization , data mining , subjectivism and other such statistical tricks and data manipulation , most trading ideas are losers .
10. Never trust the advice or ideas of the trading software vendors , stock trading system sellers , market commentators , financial analysts , brokers , newsletter publishers , trading authors , etc., unless they trade their own money and have traded successfully for years . Note those that have traded successfully over very long periods of time are very few in number . Keep in mind that Wall Street and other financial firms make money by selling you something – not instilling wisdom in you . You should make your own trading decisions based on a rational analysts of all the facts .
11. The worst thing an investor can do is take a large loss on their position or protfolio . Market timing can help advert this much too common experience . You can avoid making that huge mistake by avoiding buying things when they are high . It should be obvious that you should only buy when stocks are low and only sell when stocks are high . Since your starting point is critical in determining your total return , if you buy low , your long term investments results are irrefutably better than someone that bought high .
12. The most successful investing methods should take most individuals no more than four or five hours per week and , for the majority of us . only one or two hours per week with tittle to no stress involved


Hope these tips will prove helpful and you will make lot more in stock markets than you have already been making . The stock markets provide an excellent opportunity to diligent investors who are willing to spend time and effort on the stocks that they buy . Money is there to be made by people who are willing to spend time understanding the business model , risks faced and other nuances about the company that they are buying . Increasingly the investor is becoming more sophisticated and has stopped looking for hot tips and stories about stocks , which can double overnight .

Future Trading

The future trading is a business that gives you everything you have ever wanted from a business of your own . Many stock players label it as the world’s perfect business . It offers the potential for unlimited earnings and the real wealth . You could run at your own hours as well as continuing to do whatever you have been doing . You could operate the business entirely on your own , and could start with very little capital . You need not have any employees , so you seldom need the battery of attorneys , accountants or bookkeepers .It is interesting that you need not have problems of collection , for you seldom have any customers or any competition or advertisement fees . You do not need the office space , warehousing or a distribution system . All you need is a personal computer for transaction from anywhere in the world.

Futures Contract :
A futures contract is a standardized contract , traded on futures exchange to buy or sell a certain underlying instrument at a certain date in the future , at a specified rate . The future date is called delivery date or the final settlement date . The pre-set price is called as the futures price . The price of the underlying asset on the delivery date is called the settlement date .
A futures contract gives the holder the obligation to buy or sell , which differs from an option contract , giving the holder the right, but not the obligation . In other words , the owner of an options contract may or may not exercise the contract . The parties of a “ futures contract “ must fulfill the delivery on the settlement date .
The seller delivers the shares/commodity to the buyer , or , if it is a cash-settled future , as in case of stock futures . cash is transferred from the futures trader , who sustained a loss to the one who made a profit . To exit or close you position in an existing futures contract prior to the settlement date , the holder of the futures position has to offset his position either by selling a long position or buying back a short position , effectively closing out the futures position and its contract obligations . The futures contract is a standardized forward contract , which is an agreement between two parties to buy or sell an asset at a pre-agreed future point in time specified in the futures contract . Some key features of the futures contract are :

STANDARDIZATION :

A futures trading contract is highly standardized contract with the following details specified :

1. The underlying asset or instrument . This could be anything from a barrel of crude oil , a kilo of gold , or a specific stock or share .
2. The type of settlement , either cash settlement or the physical settlement . Most of stock futures are settled in the country by the cash .
3. The amount and the units of the underlying asset per contract . It could be the weight of a commodity like a kilo of gold , a fixed number of barrels of oil , units of foreign currency , quantity of shares , etc.
4. The currency in which the futures contact is quoted .
5. The grade of the deliverable . In this case of bonds , this specifies , which bonds could be delivered . This specifies not only the quality of the underlying goods but also the manner and the location of the delivery , in case of commodities .

How does the Future Trading work ?

There are two basic categories of futures participants : hedgers and speculators .
In general , hedgers use futures for protection against adverse future price movements in the underlying cash commodity . Take for instance , a major food processor , which cans corn . If corn prices go up , he must pay the farmer or the corn dealer more . For protection against higher corn prices , the processor could “ hedge “ his risk exposure by buying enough corn futures contracts to cover the amount of corn he expects to buy . Since cash and futures prices do tend to move in tandem , the futures position will be profit , if corn prices rise enough to offset cash corn losses .
Speculators are the second major group of futures players . These participants include the independent traders , and investors . For speculators , futures have important advantages over other investments :
If the trader’s judgement is good , he could make more money in the futures market faster , because futures prices tend , on an average , to change more quickly than the real estate or stock prices . On the other hand , bad trading judgement in the futures markets could cause greater losses than might be the case with the other investments .
Futures are highly leveraged investments . The trader puts up a small fraction of value of the underlying contract as margin , yet he could ride on the full value of the contract , as it moves up and down . The money he puts up is not a down payment on the underlying contract , but a performance bond . The actual value of the contract is only exchanged on those rate occasions when delivery takes place . Moreover, the futures investors is not charged interest on the difference between the margin and the full contract value .

Settling Futures Contract :

Futures contract are usually not settled with the physical delivery . The purchase or sale of an offsetting position could be used to settle an existing position , allowing the speculator or hedger to realize the profits or losses from the original contract . At this point , the margin balance is returned to the holder along with any additional gains , or the margin balance plus profit as a credit towards the holder’s loss . Cash settlement is used for contracts like stock or index futures that obviously cannot result in delivery .
The purpose of the delivery option to insure that the futures price and cash price of good coverage at the expiration date . If this were not true , the goods would be available at two different prices at the same time . Traders could then make a risk free profit by purchasing stocks in the market with the lower price and selling in the future market with higher price . That strategy is called arbitrage . It allows some traders to profit from very small differences in price at the time of expiration .

Risks of Futures Trading :

It is a good idea to take a long , sober look at the risks , before becoming excited about the substantial return possible from such trading . Reward and risks are always related . It is unrealistic to earn above-average investment returns without taking above-average risks as well . Most people are naturally risk averse . They dislike to big risks , especially financially risks . Perhaps you could relate to the point of view of humorist Will Rogers : “ I am not concerned about the return of my money as I am about the return of my money “ .
Futures trading had reputation of being highly risky endeavor . It is true that a high percentage of traders eventually lose money . Many people have lost substantial sums . However , its reputation is a highly risk-prone activity . Think of yourself walking in your favourite gambling casino . You decide to play roulette . The tble has a maximum of 5,000 limit on red , you should not be surprised if you immediately lost your 5,000 . On the other hand , if you made 5 bets , you could play for a long time and probably not lose very much at all
Futures trading resemble trade , where one who decides how to operate . He can make large bets or small ones too . One could trade futures carefully and risk as little as 1-2 percent of your trading capital on a single trade . You could trade a long time for this way and not lose your entire trading capital However , most people are not that much patient . The unfortunates who lose big are those who cannot control themselves . They take big risks and risk a large portion of their trading capital in an attempt to get rich quick .

Day Trading

What is Day Trading ?
It is perfect for the short term intra-day trader , who would like to hold on to the position for a few minutes to a few hour with a view of square their position before the end of the day .
 Day trading involves taking a position in the markets with a view of squaring that position before the end of that day .
 A day trader typically trades several times a day looking for fractions of a point to a few points per trade , but who close out all their positions by day’s end .
 The goal of a day trader is to capitalize on the price movement within one trading day .
 Unlike investors , a day trader may hold positions for only a few seconds or minutes , and never overnight .

What Day Trading really means ?
The term “ day trading “ is a widely misused and misunderstood term . Real day trading means not holding on to your stock positions beyond the current trading day ; in other words , not holding any position overnight .. this is really the safest way to day trade , because you are not exposed to the potential losses that could occur , when the stock market is closed due to news that could affect the prices of your stocks . Unfortunately , many people who claim to be “ day trading “ hold stocks overnight because of fear or greed , thus setting themselves up for the catastrophic of their capital . With the fluctuation of trading currencies , the term “ day trading “ changes slightly . Since currencies could be traded 24-hours-a-day , there is no such thing as “ overnight “ trading . Thus you could have open positions for longer than a day with active stop losses that could be activated at any time .
Day trading could be subdivided into a number of styles , including :
Scalpers : This style of day trading involves the rapid and repeated buying and selling of a large volume of stocks within seconds or minutes . The objectives is to earn a small profit share o0n each transaction while minimizing the risk .
Momentum Traders : This style of day trading involves identifying and trading stocks that are in a moving pattern during the day , in an attempt to buy such stocks at bottoms and sell at the tops .

Advantages of Day Trading
Zero Overnight Risk : Since positions are closed prior to the end of the trading day , new and events that effect next trading day’s opening prices do not effect your portfolio .

Increased Leverage : Day traders have a greater leverage on their trading capital because of the low margin requirements as their traders that are closed in the same market day . This increased leverage could increase your profits if used wisely .

Profit in any Market Direction : Day trading often will utilize short – selling trading to take advantage of declining stock prices . The ability to lock in profits even as market falls throughout the trading day is extremely useful during bear market conditions .

Day Trading Tips
Buy near Open Price : If possible try to buy shares below open price , or at the open price . Do not buy them if the price surges than open market price , wait for the price to come down near open price and then buy that stock .

Check Buying volumes : Before buying check out the buying and the selling quantity . The stock may go up if buying volume increases .

Check Derivative status : Check out the derivative of the stock that you wish to buy , if possible . If it if up with increasing buying volumes , you could immediately grab that share .Most of the time , it has been found that stock or share surges proportional to the derivative surge .

Wait for the target price to buy : For example , if buy is given at 150.5 , do not buy below this price , but at 150.5 price or slightly higher price . Share price may or may not go up above 150.5 for the given price , but not below the target price

Strictly maintain Stop loss : Maintain the given stop losses . This will help you to prevent from the huge loss . Suppose , for the moment , the stock what you bought falls drastically down , you may end up with the huge loss . So always maintain given stop loss .

Down wait for huge profit in single Stock : If you get some profit and notice its buoyancy then you have to sell your stock and come out of that trade . In this manner , you could earn small profit instead of loss then you could switch over to another trade and earn small profit . Likewise , if you keep earning couple of small profits in a single day , then your small profits will add up to huge profit amount in a single day . In day trading , you could forecast the move of the market using statistical tools . If you take a proper training on stock day trading , you could minimize the risk based on he mathematical analysis unlike the instincts working in any of the gambling games . Do not consider day trading as a tool to ‘get rich quick ‘ or ‘earn million overnight ‘ .

How to beat the Market Consistently ?
1. If you are new , always buy when market is up and sell when the market is down . You could do opposite but that is complicated . This had been the trading in the right decision .
2. You should consider it as business and ready to accept the loss . this means you should decide your selling price beforehand . If you achieve your desired profit , get out of the deal or if you make loss book the loss and prepare for the next step . Put control on your fear and greed .
3. Follow the age-old practice not to pull all the eggs in the same basket . Invest money in blue chip as well as mid cap with high momentum , this will reduce the heavy losses against high return .
4. Make an initial investment and always save some part of your profit as investment .
5. Loss is the part of any investment . Have a modest initial target to beat the market by 10 percent per annum . Try to be an average investor first .

Busines in Market

The stock market for beginners is a place to make some fast money . You sometimes hear how a stock went up two points , and say to yourself , if I had pulled the trigger on that one , I could have made a lot of money . Fast easy money can be made in the stock market . But slow and easy is the way to go , and if you start at an early age , a fast and easy retirement is a reality .
Beginners at the stock trading should learn all they can in order to succeed . You do not see a professional golfer pick up a club and become good at golf overnight . It takes time and knowledge to be good at anything in life . To start off , make sure you understand How the Stock Market Works . Start at the beginning and work your way up . You did not pick up a book one-day and start to read , first you learned the letters of the alphabet .

How you are going to Trade ? : Knowing this is going to let you know what you need to be reading to learn about it . Are you going to scalp , day trade , swing trade , or buy and hold for the long run . Scalping involves buying or selling a lot of shares in a stock , and you are just expecting a small move in the price . Day trading is close to scalping but you are expecting bigger moves in the price , and you do not hold the stock overnight . Swing trading is when you buy a stock and hold it for two days to two weeks looking for a big move in the price . Buy and hold is when you plan on holding to the stock for a long time . You believe the company is going to grow in value and the price is going to go much higher .
Next you will need to understand what fundamental analysis and technical analysis is :
Fundamental analysis relies economic information , such as the company’s financial situation , and quarterly earnings . This can take a lot of time regarding each company’s financial reports . Financial newspapers and magazines help you to sort out the problem . If you are going to be investing in the stock market , you should be reading this paper on a daily basis . Technical analysis is the study of the charts . The tool used for this is charting software . Charts show a stocks price movement , and with looking at the charts we can see everything we need to know about the stock , just by looking the chart .
Another important tool you are going to need is Stock Trading System . If you travel to place you have never been to before you do not just jump in the car and go . You look at the map , decide which way is going to be the best . The same is true with the stock market . Many beginners jump in without a plan of action , you have to have a plan , why and when you are going to make trade , when you are going to take your profits , and you must stay with your plan . Practice paper trading before you tart to trade to see how well you are doing . Once you are trading well on paper then it is time to open an account

Basic Rules - Future Trading

Follow the trends . This is probably some of the hardest advice for a trader to follow because the personality of the typical futures trader is not “ one of the crowd “ . The futures traders are highly individualistic ; the markets seem to attract those who are . Very simply , it takes a special kind of person , not “ one of the crowd “ to earn enough risk capital to get involved in the futures markets . So the typical trader and the typical broker must guard against their natural instincts to be highly individualistic . to buck the trend .

 Know , why you are in the markets . To relieve boredom ? To hit it big ? When you could honestly reply , you may be on your way to successful futures trading .
 Use a newsletter or system , and stick to it .
 Apply money management techniques to your trading .
 Do not overtrade .
 Take a position only when you know where your target is where you go to get out if the market goes against you .
 Trade with trends , rather than trying to pick the tops and the bottoms .
 Avoiding trading in many markets with a little capital .
 Avoid trading with volatile contracts .
 Calculate the risk/reward ratio before putting a trade on , then guard against the risk of holding it too long .
 Establish your trading plans before the market opening to eliminate the emotional reactions .
 Decide on entry points , exit points , and objectives . Subject your decisions to only minor changes during the session . Profits are for those who act , not react . Do not change during the session , unless you have a very good reason .
 Follow your plan . Once a position is established and stops are selected , do not get out unless the stop is reached , or the fundamental reason for taking the position changes .
 Use technical signals to maintain discipline – the vast majority of traders are not emotionally equipped to say disciplined without some technical tools . Use discipline to eliminate impulse trading .
 Have a disciplined , detailed trading plan for each trade ; i.e., entry , objective , exit , with no changes unless hard data changes . Disciplined money management means intelligent trading allocation and risk management . The overall objective is end-of-year bottom line , not each individual trade .
 When you have successful a trade , fight the natural tendency to give some of it back .
 Use a disciplined trade selection system … an organized , systematic process to eliminate impulse or emotional trading .
 Trade with a plan – not with hope , greed , or fear . Plan where you will get in the market , plan how much you will risk on the trade , and plan where you will take the profits .
 Cut losses short . Most importantly , cut your losses short , let your profits run . It sounds simple , but it is not . Let us look at the reasons that many traders have a hard time “ cutting losses short “. First , it is hard for any of us to admit that we have made a mistake . Let us say a position starts going against you , and all your “ good “ reasons for putting the position on are still here . You say to yourself , “ it is only a temporary set-back . After all the more the position goes against me , the better chance it has to come back – the odds will catch up . “ Also , the reasons for entering the trade are still there . By now you have lost quite a bit ; you sell yourself on giving it “ one more day “ . It is easy to convince yourself because on this time , you probably are not thinking very clearly about the position . Besides , you have lost so much already , what is a little more ? Panic sets in , and then comes the worst , the most devastating , the most fallacious reasoning of all , when you figure : “ That contract does not expire for a few months ; things are bound to turn around in the meantime . “
 “ So it goes ; so cut the losses short . In fact , many experienced traders say if a position still goes against you on the second day in , get out . Cut those losses fast , before the losing position starts to infect you , before you “ fall in love “ with it . The easiest way is to inscribe across the front of your brain , “ Cut my losses fast .” Use stop loss orders , aim for a Rs . 5000 per contract loss limit … or whatever works for you , but do it .
 Do not overstay a good market . If you do , you are bound to overstay a bad one also .
 Take you lumps . Just be sure that they are little lumps . Very successful traders generally have more losing traders than winning traders . It is just that they don't leave any hang-ups about admitting that they are wrong , and have the ability to close out losing positions quickly .
 Trade all positions in futures for a performance basis . The position must give a profit by the end of the second day after the position is taken , or else get out .
 Program your mind to accept any small losses . Program your mind to “ sit still “ for a few large gains .
 Learn to trade from the short side . Most people would rather own something than owe something . Markets can also be traded from the short side .
 Watch for the divergences in the related markets – is one market making a new high and another not following ?
 Recognize that fear , greed , ignorance , generosity , stupidity , impatience , self – delusion ,etc ., can cost you a lot more money than the market going against you , and that there is no fundamental method to recognize these factors .
 Learn the basics of futures trading . It’s amazing how many people simply don’t know what they are doing . They are bound to lose , unless they have a strong broker to guide them and keep them out of trouble .
 Standing a side is a position . Patience is important.
 Be more careful if you are extra smart . Smart people very often put on a position a little too early . They see the potential for a price movement before it becomes actual . They become worn out or “ tapped out “ , and aren’t around when a big move finally gets under way . They were too busy trading to make money .
 Never add to a losing position . Stay out of trouble , your first loss is your smallest loss .

Concept of Mutual Funds

A mutual fund is a trust that pools the savings of a number of investors who share a common financial goal ; investment may be in shares , debt securities , money market securities or a combination of these . Those securities are professionally managed on behalf of a the unit-holders , and each investor holds a pro-rata share of the portfolio that is entitled to any profit when the securities are sold , but subject to any loss in value as well .
The income earned through these investments and the capital appreciation realized are shared by its unit holders in proportion to the number of units owned by them . Thus a mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified , professionally managed basket of securities at a relatively low cost .
A simplified market definition of a mutual fund is that it is just a collection of stocks or bonds . One can look at a mutual fund as a company that brings together a group of people interested in investing and pools their money in stocks , bonds and other securities . Mutual fund is a stock that gives small investors an access to a well diversified portfolio of equities , bonds and other securities . Each investing shareholder participates in the gain or the loss of the fund . Mutual funds portfolio’s are organized to meet the investing objective stated in prospectus . the net asset value of a mutual fund is calculated daily .
Parties interested in investing in some mutual funds can do so by contacting the fund companies directly . Other funds are sold in the market through brokers , banks , financial planners or insurance agents . Mutual funds were commonly sold by third party participants at a price of sales fee , also known as a load . Today , however , more and more funds can be purchased through no-transaction fee programs that offers funds of many companies . Sometimes referred to as a “ fund supermarket “ , this service lets you consolidate your holdings and record keeping , and it still allows you to buy funds without sales charges from many different companies . Some of big names in mutual funds include companies like Schwab’s One Source , or Fidelity’s Fund Network .
There are several key factors that make investing in the mutual fund market attractive to investors . For those individuals , who do not have time or experience of investing in the stock market , mutual fund offers professional management of their money . Furthermore , by owing shares in a mutual fund instead of owing individual stocks or bonds , your risk is spread out and our investment is less volatile . The concept is that by diversification , an investor’s loss in one stock is offset by gains in others . It would be very expensive for an individual to build his own portfolio of this kind . Just as with an individual stock , mutual funds are liquid and can be turned into cash anytime .
Mutual Fund is an instrument of investing money . Nowadays bank rates have fallen down and are generally below the inflation rate . Therefore , keeping large amounts of money in bank is not a wise option , as in real terms the value of money decreases over a period of time .
One of the options is to invest in the stock market . But a common investor is not informed and competent enough to understand the intricacies of stock market . This is where mutual funds come to the rescue .
A mutual fund is a group of investors operating through a fund manager to purchase a diverse portfolio of stocks or bonds . Mutual funds are highly cost efficient and very easy to invest in . By pooling money together in a mutual fund , investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own . But the biggest advantage of mutual funds is the diversification .
Diversification means spreading out money across many different types of investments . When one investment is down another might be up . Diversification of investment holdings reduces the risk tremendously . On the basis of their structure and objective , mutual funds can be classified in to following major types :
1. Equity Mutual funds : They are also known as stock mutual funds . Equity mutual funds invest pooled amounts of money in the stocks of public companies . Stock represent part ownership , or equity , in companies , and the aim of stock ownership is to see the value of the companies increase over time . Stock are often categorized by their market capitalization , and can be classified into three basic sizes : small , medium and large . Many mutual funds invest primarily in companies of one of these sizes and are thus classified as large –cap , mid-cap or small-cap funds .
2. Growth Funds : These are those mutual funds that aim to achieve capital appreciation by investing in growth stocks . They focus on those companies that are experiencing significant earnings or revenue growth , rather than companies that pay out dividends .
Growth funds tend to look for the fastest growing companies in the market . Growth managers are willing to take more risk and pay a premium for their stocks in an effort to build a portfolio of companies with above-average earnings momentum or price appreciation . In general , growth funds are more volatile than other types of funds , rising more than other funds in the bull markets and falling more in the bear markets . Only aggressive investors , or those with enough time to make up for short term market losses , should buy these funds .