Shares are the assets of the company and its current performance. In the stock market, a person can buy and sell company shares online through brokerage firms such as Sher Khan, Angel Broking, Zerodha etc.
What is share market and stock market types of trading
Shares are digital assets and can’t be touched physically. They are the current value of the company. The share market or stock market is a platform where the fluctuation of company shares/stock prices can be seen live on computer screens. It is a market where shares of any company are bought and sold in the stock market. Intraday, holding and SIP are major stock market types of trading which are explained below.
What is share market
One needs to open an account in brokerage firms such as Sher Khan, Angel Broking, Zerodha etc. After submitting the required documents such as PAN card, aadhar card etc the account is open with zero balance and one can start trading from a minimum Rs 1000 to Rs 5000.
These brokerage firms earn based on per trade by client. One can invest or purchase shares of Rs 1 to Rs 1cr or more depending on the share price and investor fund.
Earlier the share market investment process was different, it was not digital. Investors in India used to go to the Mumbai Stock Exchange. Earlier common men were not able to invest on their own. They were helpless to go to Mumbai exchange or they depended on the brokerage firm.
Now the film has changed broker and exchange dependency are over and an individual can invest on their own after opening an online trading account. Nifty 50 stocks are best preforming stocks and you can select them after good research.
An investor can invest in the stock market even on their mobile from home. However, trading became very easy but not many people are doing the trading because of wrong information about the stock market.
In the share market a person can buy shares of any company as per their capacity and can sell them any time as per their wish. This buying and selling process is called trading and for trading one should have an account in trading firms such as Zerodha, Sharekhan etc.
These trading firms do not require much money to open an account, one can open an account in just Rs 500 to Rs 1000.
Some percentage is deducted per trade, the profit of which is kept by the trading firm. The brokerage percentage varies from firm to firm. A person doing trading in the share market may face loss and profit but the trading firm always gains profit as per trade brokerage fees.
Trading firms or brokerage firms are always in profit because they get some percentage in every trade. Whether a person loses or wins money while trading, the firm gets its fixed percentage per trade.
Intraday and holding are two important types of trading in the share market. The share market is risky when investing in intraday. Why it is risky is explained in the below paragraph.
stock market types of trading
Intraday
There is excessive risk in this type of trading and chances of winning excessive money. On intraday, a person can buy shares from 9:00 A.M. and have to sell before 3:15 P.M. Monday to Friday. Intraday trading is risky because whatever shares you have purchased today after 9 AM you have to sell them before 3 PM to 3:15 PM.
If you will not sell them at the given time the amount will automatically deduct from your trading account as per the current share price. On the other hand, holding gives options to hold the shares for a long period of 1 to 6 months, 1 year or more.
Intraday gives the facility a 10-time limit or more limit. Technically the limit is the facility of purchasing 10 times more shares for the same amount. For example, if a person purchases shares of Rs 1000 then after getting 10 time limit he can purchase shares of Rs 1000 x 10 time = Rs 10,000.
While getting the limit the person does not need to add money and they can purchase more shares. The game of limit excites small and marginal traders. More importantly, a person can’t lose more than the real invested money i.e. Rs 1000. This facility fascinates and excites many traders. When there is a loss you lose only the actual amount invested i.e. Rs 1000 and not Rs 10,000 and people get greedy and play the next bet to win even after losing.
In this investment, a minimum of Rs 100 can be invested and there is no upper limit. People often get trapped and it is also beneficial for more people. Most people lose their big money in intraday trading because as per the policy they have to sell the shares on the same day.
Holding
Most people are not aware of his type of trading. People are only aware of intraday trading and think that the market is a risky game. In this trading investor does not get any kind of limit if he has invested Rs 10,000 then he can purchase the shares of Rs 10,000 only.
This is one of the most secure trades in the share market. In this format, you can hold the shares for any period: 2 days, 1 month, 6 months, 1 year, 2 years, 5 years, 10 years, 15 years, 55 years or more. This is called long-term investment and the benefit of holding is one can hold the share when the prices are down and sell them when prices go up.
In intraday 99% of people lose their money and only one percent make some good money. In holding 80% of people make money while investing for the long term if wisely make a good portfolio of different types of shares.
SIP
SIP is known as a simple investment plan. People who don’t know anything about the share market and don’t want to take the headache of researching shares should do SIP. SIP is a collection of different winning shares automatically selected by the platform.
One can add and remove the companies from time to time according to their choice. Usually, SIP is done for 5 years to 7 years, 10 years, 15 years or more to get a good return. You must have a strategy to pick the stocks for long term investment.
Compound interest plays a major role in SIP investment and profit returns. Compound interest is an interest on interest.
Government permission
Unlike cryptocurrency, the share market is secure and authorized by the government. Investors can easily withdraw all their amount in their bank account after paying the concern tax to the government.