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Investing and Trading in Stock Markets

3/19/2014 12:00:00 AM

Investing and Trading in Stock Markets

Stock Markets: the biggest and reliable platform for small to large scale investors. Small investors are mainly retail investors, who want to generate second income or additional income to fulfill various financial needs or meet financial goals.

The question is how to make money in the stock markets for a retailer who is involved in his/her daily routine life. Stock market investments can’t be made without proper knowledge. Lack of knowledge may leads towards financial losses and ultimately towards frustrations. Normally people believes that they have sufficient knowledge and they can enter the market with it. This risks their funds – hard earned money against market uncertainties and volatility.

Then, what to do to make money in this uncertain market? It is a million dollar question and difficult to answer. But at www.NSEData.com we assure you for profitable trades.

There are number of ways or methods exist to invest in the stock markets. People follow the one which is suitable to their financial conditions and time available.  Some of them are explained here.

For cash market:

1 Long term investments:  This is the traditional and popular investment option. It is also simplest one. No specific knowledge is required.

People buy the stocks and add it to their portfolio, keep it for longer term – years and even decades to ensure prolonged benefits from the particular stock. For example: Reliance Industries… People were entered in the market with reliance and stay with it for decades. Lot of benefits like Dividend, Bonus Share, etc has been achieved.

But, now a days, specifically after 2008 debacle of stock markets, this strategy is not that much fruitful. Lot of stocks is at such prices that can never be recovered. Say Suzlon Energy. Very promising initially but since years, it is at price where people can neither hold it nor sold it. Other similar scrip is – Ashok Leyland.

2. Short Term and Medium Term Investments: This is similar to Long term investments strategy. The only difference is - the time horizon. In Long Term strategy, time was no bar neither people were bothered about stop loss. Stop Loss is the biggest tool, I repeat, biggest tool to secure and safe guard your capital.

In short term / midterm investment strategy, the investor can enter at a certain point of time to buy a stock, hold till the desired price is achieved and simply book the profit as the target achieved. The time spam may in few days to few weeks; sometimes it can be extended for few months. But not more than that. The profit margin can be set as per investor’s requirement, but for broad classification, minimum profit levels may be between 3 to 10% ideally and can be extended up to 15% to 20% if the market conditions permits. The best thing of this strategy is that investor is not bound to invest capitals for very longer periods and can have rotated the money to achieve more profitability.

The only thing – Stop Loss should be adhered with firm determination. No emissions should be allowed to change to stop loss decision.

3. Intraday Trading (Day Trading): As the word itself indicates, It is the trade done within any trading day in the markets. The Stocks can be bought or sold and reversed in the same trading day. The advantage here is, in cash markets also, trader can sell first and then buy, to take benefits of reducing markets. This not in short term or long term investment strategy. Caution is that in case of a sell trade, if we failed to buy the same stock in same amount, the exchange will buy the stocks at available rates from open market and deliver it to the buyer. This is call auction of stock. The auction may results in bigger loss. So be utmost careful while trading a sell call in intraday.

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