HOW TO DO TRADING IN STOCK MARKET

1. WHAT IS TRADING IN STOCK MARKET?
INTRODUCTION
TRADING SYSTEM
TYPES OF ORDER
TYPES OF TRADING
TRADING PROCEDURE

2. INTRODUCTION
• TRADING IN A STOCK EXCHANGE TAKES PLACE LIKE:-
THE MEMBERS EXECUTE THEIR BUY OR SELL ORDERS IN SECURETIES
AND CASH.

3. TRADING SYSTEM
• IN THE NEW ELECTRONIC STOCK EXCHANGES WHICH HAVE FULLY
AUTOMATED COMPUTERIZED MODE OF TRADING, KNOWN AS
SCREEN-BASED TRADING:-
1. BIG TRADER
2. RETAILER
• THE MARKET MAKER USE TWO SYSTEM THAT IS BID & OFFER PRICE.
• RETAILERS PLACE THEIR BUY & SELL ORDERS WITH THE BROKERS.

4. TYPES OF ORDER
• AN INVESTOR MAY PLACE TWO TYPES OF ORDER NAMELY:-
1. MARKET ORDER:- THE BROKER IS INSTRUCTED BY THE INVESTOR TO
BUY AND SELL A STATED NUMBER OF SHARE IMMEDIATELY AT THE
BEST PRICE IN THE MARKET.
2. LIMIT ORDER:- IT IS AN ORDER FOR THE PURCHASE OR SALE OF
SECURITIES AT A FIXED PRICE.
“BUY AT LESS, SELL AT HIGH”

5. PROFIT BOOKING/ LIMIT LOSSES FIRST
• CERTAIN WAYS WHERE INVESTOR PROTECT THEIR PROFIT OR LIMIT
THEIR LOSSES
1. STOP ORDERS:- IT IS AN ORDER TO SELL AS SOON AS THE PRICE
FALLS UP TO A PARTICULAR LEVEL OR TO BUY WHEN THE PRICE
RISES UP TO A SPECIFIED LEVEL.
2. STOP LIMIT ORDER:- WITH THIS, THE INVESTOR SPECIFIES TWO
PRICES, A STOP PRICE AND A LIMIT PRICE. WHEN THE MARKET
PRICE REACHES OR PASSES THE STOP PRICE, THE STOP LIMIT ORDER
BECOMES A LIMIT ORDER TO BE EXECUTED WITHIN THE LIMIT
PRICE.

6. TYPES OF TRADING
• AN INVESTOR MAY PLACE ORDERS FOR TRADE THROUGH HIS BROKER
AT ANY TIME DURING THE OFFICIAL TRADING HOURS.
1. INTRADAY TRADE:- A DAY TRADE IS AN ORDER THAT IS VALID ONLY
FOR THE SAME DAY ON WHICH THE ORDER IS PLACED. IF THE
ORDER IS NOT EXECUTED BY THE END OF THE DAY IT IS TREATED AS
CANCELLED.

7. INTRADAY TRADING
• IN SHORT TERM TIME FRAME
• TIME PERIOD OF TRADE FOR A DAY MAXIMUM. DO NOT HOLD
POSITIONS OVERNIGHT.
• RISK INVOLVED
• SKILL REQUIRED
• CAPITAL REQUIRED
• SUCCESS RATE
“PERHAPS THE MOST WELL KNOWN ACTIVE TRADING STYLE”

8. INTRADAY

9. SCALPING
• ALL ABOUT TAKING SMALL PROFITS
• TRADES LAST FROM 5 TO 15 MINUTES
• HOLDING PERIOD
• RISK INVOLVED
• SKILL REQUIRED
• CAPITAL REQUIRED
• SUCCESS RATE

11. SWING TRADE
• IT SHOULD BE SHORT AND MEDIUM TERM
• ONE CAN SWING FPR SEVERAL DAYS, SOMETIMES FOR WEEKS
• RISK INVOLVED
• SKILL REQUIRED
• CAPITAL REQUIRED
• SUCCESS RATE
“IF TREND BREAKS, SWING TRADERS TYPICALLY GET IN THE GAME”

13. POSITIONAL TRADING
• LONG TERM
• TRADE FOR WEEKS, MONTHS, AND YEARS
• RISK INVOLVED
• SKILL REQUIRED
• CAPITAL REQUIRED
• SUCCESS RATE
“WE CAN CONSIDER POSITION TRADING TO BE A BUY AND HOLD
STRATEGY AND NOT ACTIVE TRADING”

15. TRADING PROCEDURE ON A STOCK
EXCHANGE
1. SELECTION OF A BROKER:- THE BUYING AND SELLING OF
SECURITIES CAN ONLY BE DONE THROUGH SEBI REGISTERED
BROKERS WHO ARE MEMBERS OF THE STOCK EXCHANGE. SO THE
FIRST STEP IS TO SELECT A BROKER WHO WILL BUY/SELL SECURITIES
ON BEHALF OF THE INVESTOR.
2. OPENING DEMAT ACCOUNT WITH DEPOSITORY:- DEMAT ACCOUNT
REFER TO AN ACCOUNT WHICH AN INDIAN CITIZEN MUST OPEN
WITH THE DEPOSITORY PARTICIPANT TO TRADE IN LISTED
SECURITIES.

16. 3. PLACING THE ORDER:- AFTER ACCOUNT, THE INVESTOR CAN PLACE
THE ORDER. THE ORDER CAN BE PLACED TO THE BROKER EITHER
PERSONALLY OR THROUGH PHONE, EMAIL.
( ANY EXAMPLE OF STOCK)
4. EXECUTING THE ORDER:- AS PER THE WISH OF INVESTOR, HE CAN
EXECUTES THE ORDER THAT MEANS BUYS OR SELLS THE SECURITIES.