share market indian free tips basics bse nse share market

Important terms in share market and in share trading

Open - The first price at which the stock opens when market
            opens in the morning.
High - The stock price reached at the highest level in a day.
Low - The stock price reached the lowest level in a day.
Close - The stock price at which it remains after the end
            of market timings or the final price of the stock when
            the market closes for a day.
Volume - Volume is nothing but quantity.
Bid - The Buying price is called as Bid price.
Offer - The selling price is called offer price.
Bid Quantity - The total number of shares available for buying
                       is called Bid Quantity.
Offer Quantity - The total number of shares available for
                         selling is called Offer Quantity.
Buying and selling of shares -
Buying is also called as demand or bid and selling is also
called as supply or offer.
First selling and then buying (this only happens in day trading)
is called as shorting of shares or short sell.
Share Trading - Buying and Selling of shares is called
                          share trading.
Transaction - One complete cycle of buying and selling of
                      shares is called One Transaction.
Squaring off - This term is used to complete one
                       transaction. Means if you buy then have to
                       sell (means square off) and if you sell then
                       you have to buy (means square off).

Limit Order - In limit order the buying or selling price has to be mentioned and when the share price comes to that
                     price then your order will get executed with the mentioned price by you.
Market Order - When you put buy or sell price at market rate then the price get executes at the current rate of market.
                        The market order get immediately executed at the current available price.
Stop Loss Orders - Stop loss orders ("stops") are limits set by traders at which they will automatically enter or exit
                              trades - an order to buy or sell is placed in the market if price reaches a specified limit.
                              A stop loss order is set to limit a trader's potential loss. The stop loss is placed below the current
                              price (to protect a long position) or above the current price (to protect a short position).

Learn Share Trading and Processes
Share Trading -
Buying and Selling of shares is called share trading.
Mainly there are two ways of doing share trading.
¨ Online Share Trading.
¨ Offline Share Trading.
¨ Online Share Trading -
    Doing share trading with help of computer, internet connection and with trading/demat account is called Online
    Share Trading.
    If you would like to do online share trading then you should have a computer, internet connection and online trading
    account.
    Details of Online share trading has been given in next chapter.
¨ Offline Share Trading -
    Doing share trading with the help of broker or through phone is called Offline trading.
    In other words trading will be done by another person on your behalf based on the instructions given by you, and
    then the other person can be a broker.The broker will do buying and selling of shares on your behalf depending on
    the instructions given by you.
    If you want to do offline share trading then you need to open the demat account. (provide link for procedure to open
    the demat account)
    Details of Offline share trading has been given in next chapter.

Different methods of buying and selling of shares
Following are the types of orders which are used for buying and selling of shares.
¨ Market Order -
    When you put buy or sell price at market rate then the price get executes at the current rate of market. The market
    order get immediately executed at the current available price. In market order there is no need to mention the price;
    the shares will get executed at the best current available price. If you wish to buy or sell shares at any specific
    price then market order is not suitable for you then you have to go for limit order. Market order is for those who want
    to buy or sell immediately at the current available price.
¨ Limit Order -
    It’s totally different to market order. In limit order the buying or selling price has to be mentioned and when the share
    price comes to that price then your order will get executed with the mentioned price by you. But here it’s not sure
    that the price will come to your limit order. In day trading its risk because you have to close all your transactions
    before 3:30 PM and if in case price doesn’t reach to your limit order then your order will be open and then you have
    to go through (bare) the heavy penalties.
    Importantly limit order and stop loss trigger price are used together.
¨ Stop Loss Trigger Price-
    Stop loss and trigger price are used to reduce the losses. This is very important term especially if you are doing day
    trading (intraday).Stop Loss as the name indicates this is used to reduce the loss.

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

¨ Delivery Trading
    In Delivery Trading, as the name say, you have to take the delivery of shares and after getting these shares in your
    demat account you can sell them at anytime (or you can hold them till you want, there is no restriction). In delivery
    trading you need to have the amount required to buy share for example, if you want to buy 100 shares of Reliance at
    price 500 than you must have (100*500) Rs. 5000 in your account; once you purchased these shares will get
    deposited in your demat account (say after basically, trading day and 2 additional days). Then you can sell
    these shares when the price of these shares goes up or else you can sell whenever you want.
    Please Note - First you have to buy and sell. You can’t sell before buying in delivery trading while it’s possible in day
    trading.

Fundamental and Technical analysis in Indian Share Market
The fundamental and technical analysis are widely used for share traders but use of these analysis differs from traders to traders.
First of all lets see what these analysis means -
a) Fundamental Analysis -
The name itself indicates that this analysis is totally based on companies’ fundamentals. Fundamental analysis is used for long term analysis and long term returns.
Following are the few fundamental terms used to forecast and analyze the companies’ future growth and based on this analysis transaction of shares will be done.
¨ Companies expansion or planning in coming future.
¨ Management processes and planning
¨ Meeting of Board of directors
¨ Declaration of yearly financial statements
¨ Study of past performance of the company.
¨ Study of quarterly, half yearly and annual reports.
¨ Companies involvement in foreign investment/collaboration, political or economic involvements, etc.
Depending on these factors and many others, fundamental analysts prepares certain share market and share trading related terms which will be used to forcast the company growth and prospects. The terms like
¨ Whether the share prices are overvalued or under valued,
¨ Working capital ratio,
¨ Return on equity ratio,
¨ Debt equity ratio etc.
Based on these terms and other fundamentals, the analysts predict the movement of share prices that is either bullish or bearish in coming future.
Basically fundamental analysis is meant for long term investments and not for day trading or short term investment. So traders planning to invest for long term in share market then they must go for fundamental analysis.
Always good fundamental companies give good results and returns for share holders in long term.
b) Technical Analysis -
As fundamental analysis made for long term investments, likewise technical analysis is made for day traders and short term traders. Technical analysis is nothing but study of charts, support and resistance levels, technical indicators and other parameters which are useful to analyze the share price movements in short term or in day trading. There are several factors and terms in Technical analysis which will be discussed in detail in further topics.

Information and guide on Online Share trading
What is Online share Trading ?
Trading with the help of computer having internet connection and online trading account is called Online Share
Trading. Basically people use online share trading who want to trade themselves.
Essential of Online Trading -
¨ Online trading account - You have to open an online trading account with any of the bank or financial trading system
    like ICICIdirect.com, 5paisa.com, Sharekhan.com etc. Their will be nominal annual charges. These charges vary
    from bank to bank but should not be more than Rs.1000 annually.
¨ A computer with internet connection or can do trading in internet cafe.
¨ After successfully opening the online account you will receive the username and password with the help of which
    you can login in online trading system and trade yourself.
¨ The trading system executive (with whom you opened trading account) will help you initially about how to use the
    online trading system.
¨ Once you get familiar with the system then you can trade yourself at your home or in the internet cafe.
¨ Nowadays you can get internet enabled on your cell (which is called GPRS) whose speed will be sufficient to do
    trading and also the charges of GPRS are very nominal.
Advantages of Online Trading
¨ No need to depend on any broker or anybody else to place the order or to square off the order. In short you are the
    boss of yourself to do trading of shares.
¨ Its reliable, convenient and you can take your own decisions yourself by actual selling or analyzing the market on
    the computer screen instead of calling broker all the time and getting news about the market.
¨ Its not possible or practical for a broker to update you about each and every news about the market or any news
    which will influence or affect the share market. Because he may be having many other customers like you and even
    if he updates you by that time the news have been affected the concerned sector or share. So if you are doing
    online trading yourself, then you may save yourself from big disaster. You will get news and updates on
    various websites and also on your online trading system and most of the information will be free of cost.
    “Always remember share market always get influences (or affected) by the appropriate news. So get updated or
    be in touch with news all the time. This will benefit you always.
¨ By doing online trading yourself, you can see and judge where market (or your share) is heading by seeing different
    graphs online yourself, which is not possible if you’re trading through broker. Some online trading systems have
    graphs integrated in their system, so your job is to just add those graphs and check the status of current market
    (or share) (graphs will be discussed later). And depending on your analysis you can take steps towards
    your successfully trading. (How to analyze graphs will be mentioned later).
¨ All your transactions and related documents can be seen online and can also be downloaded to your PC without
    depending on your broker. You can also check the status of your amount on daily basis through you online trading
    system.
Disadvantages of Online Trading
¨ In online trading system you may face problem of disconnection to internet due to which you will not be able to login
    to your online trading system and hence you can’t do trading yourself. At such critical times you have to call trading
    system executive and do trading or square off your transactions.
¨ If may face other problems such as electricity cut-off, PC problem etc during online trading then immediately you
    have to contact your trading system executive and place orders or do trading.

Investment in Long term trading in Indian share market
Short Term Trading -
Share trading done from one week to couple of months is called short term.
Companies or sectors having some breaking news will be used for short term trading
Mid term Trading -
Share trading done from one month to couple of months, say six to eight months is called mid term trading.
Companies announcements of quarterly results or some big foreign acquisitions will be used for mid term trading.
Long term trading -
Share trading done form couple of months to couple of years is called long term trading.
Companies whose fundamentals are good and have good future plans then the shares of these companies are used
for long term trading.Generally traders having good capital go for long term trading.