Intra-Day Trading v/s Delivery Based Trading

While doing stock market investment you can trade in two different ways. You can either do intraday trading or can opt for delivery based investment. Intraday trading is typically completed within a day that means you have sell the stocks that you have purchased that day before the closing of the exchange. Even if you do not sell the stocks by yourself, they will automatically square off before the closing of the exchange. In case of delivery based investment or long term investment, you can sell the stocks as and when you wish to sell or buy them. Both these types of stock trading have its pros and cons.

Advantages of Intra-Day Trading

• In day trading you can buy stocks without paying for the full price of the stocks. The market makers allow you pay only a part of the price to hold the shares. So, you can gain more by investing less.
• In day trading you can always short sell the stocks that mean you can always sell the stocks before buying them and then buy the stocks before the closing of the market. This is one benefit that can give you profit even when the price of the stock is sure to fall.
• The brokerage of the intraday trading is always lower than the delivery trading.
• In day trading you are getting the profit on the very day. So, you investment is for a few hours only. Therefore, even if the stock price rises, a little your profit percentage is significant.
• You get back the money each day after the market closes and hence you can always start afresh the next morning.

Disadvantages of Intra-Day Trading

•  The biggest disadvantage of intraday trading is the time frame. You have to sell the stocks within a day. So, if the stock loses price you are sure to lose money

Advantages of Delivery Based Trading

•  With delivery based trading, you can always hold a stock till it reaches the expected price.
•  The long term investment can always get you dividend.
•  You can also benefit from split shares, bonus stocks and other benefits that the company announces.

Disadvantage of Delivery Based Trading

•  In delivery trading you pay higher brokerage.
•  Your investment is always susceptible to market crashes, business cycles and other factors.
•  Whatever it is, as an investor, you should know which stock is for intra-day trading and which one is to hold as long term investment.

What is the opening price of a stock? Is it same with the closing price of the previous day????????

That’s like asking how long a piece of string is. The answer is as Chandu Sir says ‘it depends.’

Once a stock moves out of the IPO stage and into the open market, there are a number of factors that go into setting the price.


Opening Price

For example, Infosys closes on Tuesday at 2776.80; what will it open at on Wednesday morning?

The answer is : 
who knows. Most likely, it will open somewhere around 2776.80; but as you can see over here the current day opening price is 2765.00 which is less than 11.80 from the previous day closing price. Any number of things might cause it to open higher or lower. Before the market opens on Wednesday:

• FDI in retail Sector
• Budget of 2012-13
• Monetary policy set by RBI

All of these circumstances and many others could influence the price up or down. In the end, it remains a question of what a buyer is willing to pay and a seller is willing to take.

The swirl of market, political, and industry news influences whether there are more buyers or sellers for a particular stock in the market at any one time.

Have Some Fun!

Murphy's Laws:

What do both stock markets and women have in common?
They both go Up and Down...

Stock Market Day Trader:


The Pessimist sees the glass as half empty.
The Optimist sees the glass half full.
The Stock Market Day Trader JUST ADDS WHISKEY ...

A Stockbroker:


There was a tremendous turnaround in the market today:
A stockbrocker who jumped out of a window on the twelfth floor, saw a computer screen on the seventh floor and did a U-turn.

Stockbroker eligibility:


QUESTION: When does a person decide to become a stockbroker?
ANSWER: When he realizes he doesn't have the charisma to succeed as an undertaker.

The Difference Between Trading Stocks And Stock Options

In the stock market industry, the trade for stocks and stock options are often interchanged and many may be confused between the concepts behind these types of trades. However, what you should know is that these two have very different characteristics from each other, and using them interchangeably can be very lethal if you want to engage in the stock trading game.

Knowing the difference between these two would not only save you on making serious trading mistakes, but perhaps, you can be guided on making a smart business decision on which particular trade you would actually want to make your investments.

Stocks Versus Stock Options

By definition, stocks are actually shares of a particular company that can be traded through the act of buying or selling by an investor. If you happen to own a particular stock from a company, you are entitled to certain rights, which may include a profit share from earnings. You may also have the liberty to sell your share of stock if you no longer desire it.

A stock option on the other hand, is not the stock or share of the company itself, but it is actually the rights for a certain stock. It actually allows you to buy and sell company stock at a set price in a certain time period. However, you do not gain the profits from the company itself.

Take note that in doing transactions for stock options, there will always be a buyer and a seller, and this may not always hold true when compared to stocks. When you sell stock options, you are actually creating a certain degree of security for the company as well as for yourself. In this way, the parties involved can make sure that money is actually made to the frequent trade that happens.

Comparing The Benefits

In comparing the benefits of trading stocks and stock options, many experts would claim that stock options might be a promising gamble for companies and individuals, especially if you have adequate experience in the trading game and can substantially use very good strategies to survive. However, the same results might not be expected if you are only a beginner.

What makes a lot of experts prefer options trading is usually because in this particular trade, no matter what would happen to the underlying security, an option buyer cannot lose to more than that of the initial price paid for the rights. Therefore in trading options, there are fewer risks involved on the part of the buyer, especially when it comes to the possibility of losing a lot of money. And it may even give promises of profitable gains.

But on the other hand, the seller may experience greater risks. There may be a possibility that one has to deliver or take deliveries of the stock shares. Unless the option is actually covered by a different option, then the seller may end up losing much more than the stock option’s original price.

And so, if you are not well skilled and knowledgeable about how you can prevent severe losses, then the best way for you to play the stocks trading game is to stick with the more traditional trading of stocks as this can be easier.

However, if you do believe that you can manage then options trading may give you many promising positive results. Just make sure that you take the time to understand concepts and strategies behind stock options before you actually start trading.

Familiarizing Commonly Used Stock Market Terminologies

The stock market is a great arena for people to make a lot of money, however, for many beginners, all the hustle and bustle of stock trading may cause a lot of confusion, especially if you are not familiar with the many terms and tactics used for negotiations.

If you are a beginner in the stocks game, make sure that you familiarize and educate yourself well on stock trading knowledge. You can of course, start off by widening your vocabulary. Here are a few terms that you may need to familiarize:

Stocks

Stocks are probably the most important and common items traded in the stock market. These are actually shares of certain companies, which are publicly sold and traded.

Whenever people buy a portion of stock in a particular company, this means that they acquire a share of ownership and investing in that specific business. Through this, a stockholder is given certain rights towards the company such as a vote in stockholder meetings as well as his or her financial share from the company’s earnings.

Broker

A stockbroker is the person who handles the actual trading of stocks. He or she does the negotiations to buy and sell the stocks in behalf of the investors and the companies involved. The many various types of brokers may include full-service, online, auto-trade and discount brokers.

Bull Market

A bull market is a market that manifests a continuous increase in the value of its stocks as well as a steady growth. Generally, with this type of market, investors gain an optimistic attitude and may want to buy more rather than sell stocks.

Bear Market

Bear markets mainly characterize significant losses and declines in a particular market. With this type of behavior among stocks, most investors would generally want to sell more of their stocks and may be pessimistic about investing.

Dividends

Dividends are added or bonus payments given to stockholders after a profitable quarter. With this sum of money, many people may often reinvest on more shares of stock, which allows individuals to earn so much.

Futures

Futures, just like stocks, are also traded in the market. However, these are purchased against future costs of commodities. You can earn from these, if in time, the actual price of commodities become higher than what you paid for the futures. On the other hand, you can also lose money if the price becomes lower that what you paid for.

Day Trader

A day trader is the person who buys and sells stocks aggressively in one day. Usually, he or she does this for several times each day in order to make quite a few small profits within the day.

Trading on Margin

Trading on margin may be similar to trading stocks with the use of borrowed money. Through this, you can purchase shares of stock for only a portion of the actual price. The remainder of the cost can be paid upon the actual sale of the particular stock, or on a later date.

These terms are only a few of the most commonly used language in stock trading. And upon encountering them, you may certainly have the impression of how intimidating the stock market can get. With the many complicated terminologies and tactics, you may easily get backtracked if you do not know enough about what you are dealing with.

Remember that if you are new at doing business in this arena, make sure that you take the extra mile to learn more about more terms as well as strategies on how you can best maximize profit. A little hard work will certainly get you far, and one of these days you will realize how all of this can pay off.

What You Need To Know About Day Trading

One of the fast growing trends in the stock trading arena these days is day trading. Today, more and more people are getting into this drift due to the many promises of making fast and easy money on their minds. However, what a lot of people fail to realize is that the buy fast and sell fast strategy of day trading may not always turn out as a very wise tactic to adopt in the stocks game.
Day trading can be a bit of a gamble and traders remain divided on the issue on whether or not this serves much purpose to the stock exchange industry.
Still, what most people could agree on is the fact that day trading is certainly not for everyone, and that it can involve huge risks. And so, before you immerse yourself in day trading, be sure that you get your facts straightened out.

What Is Day Trading?


Day trading is the buying and selling of securities for a certain stock within a single day. The main goal of those who practice this type of trade is basically to be able to profit from the difference between prices for buying and selling.
This type of trading serves two very critical functions in the industry. First, it keeps the markets efficiently running because of arbitrage as stock exchange basically thrives on buy and sell activities. Another function for this is that it usually provides so much liquidity in the stock market.

What Makes Day Trading Risky?


Although day trading may sound quite appealing at first, be warned that up to this day, the profit potential of this type of trading is still under debate among investors and brokers. And if you are new to the trading game, it is not advisable for you to gamble your investment as you may end up losing substantial amounts of money.
Although day trading is not necessarily illegal nor is it unethical, most would agree that it is risky because principles of this trade are based on the “fast and easy money” mentality, and therefore, day traders rely on making profit by rapidly buying and selling stocks in a single day as their stocks continue to rise and fall in value.
Of course, the chances relied upon are not quite dependable and choosing to do business this way seems more of a gamble than a sure way to gain money. Most financial advisors may discourage people from entering this type of trading, with the argument that most of the time, rewards do not justify the risks involved.
Apart from this, many parties capitalize on much of the confusion behind the controversies on day trading and create multiple Internet scams. And since most investors in these type of trades do not actually have a lot of money and may use borrowed money to buy stocks, this can be very dangerous.
The bottom line is, most financial experts would argue that most successful companies have grown not because of day trading, but through more traditional means.
If you were currently not very familiar with the stock market game, then it would be wise for you to stay away from day trading. Take in mind that the best way to earn profit may be through the long process and hard work, and taking shortcuts may certainly involve much more risks than you may want to bargain with.

Exchange Traded Funds (ETF)

                                                              It is time for young managers to move strategically to shake the globe.  Courageous decision making in the turbulent financial world is the order of the day. Innovation of new products more so financial products would make them stay in the market.  The Indian finance market does not provide many innovative opportunities for investors to invest unlike U.S. markets, nevertheless, ETFS (Exchange traded funds) are available in Indian markets like US markets.   Most of us are familiar with mutual funds, a portfolio of different equity and debt in which one can trade easily.  But many of us are not familiar with Exchange Traded funds (ETFS).  By buying and owning an ETF, one can achieve successfully the strategy of diversification with lower investments of funds and increased return. It has the feature of diversification of index fund, the ability to sell short and also buy on margin.  It is a good product for day trading also but that may not be the right strategy for accomplishment of long- term financial goals and objectives.   I personally, may not prefer day trading of ETFs but it is a hot cake in the market for day traders.

                                                  The strength of passive ETFS is something so strong to build portfolio due to the basic feature of its expense ratios, which are lower than those of the average mutual fund.  In the world the most widely known ETF is the SPDR, which is popularly pronounced as SPIDER.  This ETF is superb to buy as it is a darling in any street- whether wall or dallal- wherever it moves. Anyhow there is no such product in Indian market.    Passive funds generally do not protect investors and the asset class depreciates in a down market, for example if Sensex falls by 10% passive ETFs also fall by 10%  but  it is not so with dynamic ETFS, such lefts now exist and are quite interesting products.

                                               ETF industry is growing rapidly in the recent past. AUM under ETF   has touched 1trillion dollars in 2011.  There are more than 1,000 ETFs available in US market and many more added daily.  In India few ETFs are available and efforts are on to improve ETFs trading in India but as of date the market is not very active.  ETFs generally compete with long term mutual funds.  It has a market share of 10% in the total 11 trillion dollars market of US.  Black Rock, Vanguard, Wisdom tree etc., are creators of ETFs.  Look into the average return of these funds for the past three years and ascertain the tradeoff between the risk and the return of ETFs, one can find 9 out of 10 funds outperforming the benchmark return.  Domestic ETFs have performed better than International ETFs even though international ETFs have diversified risk better, but failed on the risk return trade off.  Young Managers have to move strategically to ensure they stay in the market and change the whole scenario in the market with global outlook.