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Before Investing

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Hardik Shah

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Before investing, it is always wise to learn the Basics of Stock Market.

We have compiled articles and tutorials on the Share Market Basics. Also included here explanation of Stock Market Terms and jargon used by people involved in trading stocks and shares. Whether it is Bombay Stock Exchange (BSE), National Stock Exchange (NSE), London Stock Exchange (LSE) or New York Stock Exchange (NYSE), trading terms or more or less similar INVESTING IN STOCKS Many of us would like to try our luck in the Stock markets. Yes, Why Not ? Trading stocks is one of the most lucrative methods of making money. Here's Why : 1. You do not need a lot of money to start making money, unlike buying property and paying a monthly mortgage. 2. It requires very minimal time to trade - unlike building a conventional business. 3.. Its fast cash and allows for quick liquidation (You can convert it to cash easily, unlike selling a property or a business). 4. Its easy to learn how to profit from the stock market. But You need to have your basics clear. Unless you do.you will be wasting your time and loosing money. You need to be crystal clear of each and every aspect of Investments, stock options, Stock Trading, Company, Shares, Dividend & Types of Shares, Debentures, Securities, Mutual Funds, IPO, Futures & Options, What does the Share Market consist of? Exchanges, Indices, SEBI , Analysis of Stocks How to check on what to buy?, Trading Terms (Limit Order, Stop Loss, Put, Call, Booking Profit & Loss, Short & Long), Trading Options Brokerage Houses etc.
I n v e s t S a f e l y t h r o u g h S y s t e m a t i c I n v e s t m e n t P l a n s New

How are your investments doing?

Stocks & Shares Education Centre
What is a share ? What is a Demat Account ? Stock Options Defination Online Stock /Share Trading You Buy Prices Fall - Article What is Technical Analysis ? NET ASSET VALUE (NAV) IPO - Initial Public Offering AGM - Annual General Meeting Aging Schedule Different Kinds of Investment What are Premium Issues ? Investing Vs. Trading Stock Market Tips Stock Market Myths Saving VS. Investing Do you have a Trading Plan ? What is the IPO Scam all about ? After Tax Stock Options Trading - Safer Bet What exactly are Investments? Primary & Secondary Markets Stock Broker How Stock Market Works ? What is a Bull Market ? What are Dividents ? Common Trading Mistakes What is Active Share ? AD Index - Advance Decline Index

Stock Market Terms - Definition and Meaning

Stock Market Terms - S h a r e

Market Terminology - Investment

Definitions, Financial Term Meaning A to Z

Amortization, Application-Money
Screen Trading (AST),
Average,

A-

Active Share,
Automated

Asset Coverage Asset

Bear Cycle, Book Profit, Booking

Financing, Auction Market, Auctioning of an Issue,

Averaging,

Profit, Broker, Book Value, BSE Sensitive Index or SENSEX, Bullion,

Strategy, Call Money, Capital Asset, , Capital Market, Cash Cow, C D o r C u m

D i v i d e n d , Certificate of Deposit, Certified Cheque, Chinese Wall, Circuit Breaker, Clearing,

Buy and Hold

Compound Growth Rate, , Correction, Cost-Benefit Analysis, Cover, Covered Call, Creeping Acquisition,
Clone Fund, , Collection Ratio, Commodities Market, Commodity,

CRISIL, Cum-Dividend or CD, Crossing, Cum-Rights or CR, Cumulative Preference Shares,

Cyclical Shares - Daily Margin, Dawn Raid, Debentures, Defensive Investment, Defensive Stock,
Delisting, Deflation, Delivery Order, Delivery Price, Depreciation, Derivative,

Dematerialization of Scripts,

Discounted Debentures, Discounting, Dividend Cover, Dividend Play, Dividend Rollover Plan, Dow Theory, Depository Receipt, Efficient Market Hypothesis, Eligible Securities, ELSS, Employee Buyout, Employee Participation, Employee Share Ownership Plan, Equity Shareholders, Eurodollar, FIFO or First In First Out, FII, Fill or Kill

Fixed Income Investments, Floating Stock, Floor Broker, Floor Trader, FForward Dealing / Trading, Forward Delivery, Forward Shares, Forward Integration, Free Lunch Theorem,
Order, Free Market Economy, Front End Load, Front Running, Frozen Assets, Fully Diluted Earnings Per Share, Fully Paid Share Capital, Fundamental Analysis, Futures, Futures Contract, Futures Market

Glamour Shares, Godfather Offer, Going Long, Going Private, Going Public, Going Short, Gold

Certificates, Golden Handcuffs, Golden Handshake, Golden Share, Good Delivery, Good Faith Deposit, Graham and Dodd Strategy of Investment, Great Crash, Gross, Gross National Product (GNP),

Growth Shares, Gun Jumping, Glamour Issue.Havala or Hawala (also, Making Up Price, Head
and Shoulders, Hedging Against Inflation,Inefficient Market, Insider, Insider Trading, Insolvency, Institutional Investor, Intangible Assets, Interbank Market, Interest Rate Risk, International Finance Corporation, International Monetary Fund, Inventory, Inventory Turnover, Inverted Yield Curve, Investment Analyst, Investment Club, Investment Company,

Investment Company

Shares (Close Ended), Investment Company Shares (Open Ended), Investment

Horizon, Investment Letter, Investment Trust, Investor Protection, Issue Price.MORE

- Share Market Terms

I P O , Irredeemable Debentures,

Mutual Fund Basics - What is a Mutual Fund ? Types of Mutual Funds, What is Net Asset Value ?, History of Mutual Funds in India, How to invest in Mutual Funds ........ Check out

In simple Words, a share or stock is a document issued by a company, which entitles its holder to be one of the owners of the company. A share is issued by a company or can be purchased from the stock market.

By owning a share you can earn a portion and selling shares you get capital gain. So, your return is the dividend plus the capital gain. However, you also run a risk of making a capital loss if you have sold the share at a price below your buying price. A company's stock price reflects what investors think about the stock, not necessarily what the company is "worth." For example, companies that are growing quickly often trade at a higher price than the company might currently be "worth." Stock prices are also affected by all forms of company and market news. Publicly traded companies are required to report quarterly on their financial status and earnings. Market forces and general investor opinions can also affect share price. Quick Facts on Stocks and Shares Owning a stock or a share means you are a partial owner of the company, and you get voting rights in certain company issues Over the long run, stocks have historically averaged about 10% annual returns However, stocks offer no guarantee of any returns and can lose value, even in the long run Investments in stocks can generate returns through dividends, even if the price

How does one trade in shares ? Every transaction in the stock exchange is carried out through licensed members called brokers. To trade in shares, you have to approach a broker However, since most stock exchange brokers deal in very high volumes, they generally do not entertain small investors. These brokers have a network of sub-brokers who provide them with orders. The general investors should identify a sub-broker for regular trading in shares and palce his order for purchase and sale through the sub-broker. The sub/broker will transmit the order to his broker who will then execute it . What are active Shares ? Shares in which there are frequent and day-to-day dealings, as distinguished from partly active shares in which dealings are not so frequent. Most shares of leading companies would be active, particularly those which are sensitive to economic and political events and are, therefore, subject to sudden price movements. Some market analysts would define active shares as those which are bought and sold at least three times a week. Easy to buy or sell.
Demat refers to a dematerialised account.
Though the company is under obligation to offer the securities in both physical and demat mode, you have the choice to receive the securities in either mode.

If you wish to have securities in demat mode, you need to indicate the name of the depository and also of the depository participant with whom you have depository account in your application. It is, however desirable that you hold securities in demat form as physical securities carry the risk of being fake, forged or stolen.

Just as you have to open an account with a bank if you want to save your money, make cheque payments etc, Nowadays, you need to open a demat account if you want to buy or sell stocks. So it is just like a bank account where actual money is replaced by shares. You have to approach the DPs (remember, they are like bank branches), to open your demat account. Let's say your portfolio of shares looks like this: 150 of Infosys, 50 of Wipro, 200 of HLL and 100 of ACC. All these will show in your demat account. So you don't have to possess any physical certificates showing that you own these shares. They are all held electronically in your account. As you buy and sell the shares, they are adjusted in your account. Just like a bank passbook or statement, the DP will provide you with periodic statements of holdings and transactions. Is a demat account a must? Nowadays, practically all trades have to be settled in dematerialised form. Although the market regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of upto 500 shares to be settled in physical form, nobody wants physical shares any more.
So a demat account is a must for trading and investing. Most banks are also DP participants, as are many brokers. You can choose your very own DP. To get a list, visit the NSDL and CDSL websites and see who the registered DPs are. A broker is separate from a DP. A broker is a member of the stock exchange, who buys and sells shares on his behalf and on behalf of his clients. A DP will just give you an account to hold those shares. You do not have to take the same DP that your broker takes. You can choose your own.

Is your DEMAT Account Frozen ?

your DEMAT Account

Steps to Defreeze

I n v e s t S a f e l y t h r o u g h S y s t e m a t i c I n v e s t m e n t P l a n s New
MORE ARTICLES on SHARE MARKET BASICS -

to.......Z Investments, stock options, Stock Trading, Company, Shares, Dividend & Types of Shares, Debentures, Securities, Mutual Funds, IPO, Futures & Options, What does the Share Market consist of? Exchanges, Indices, SEBI , Analysis of Stocks How to check on what to buy?, Trading Terms (Limit Order, Stop Loss, Put, Call, Booking Profit & Loss, Short & Long), Trading Options Brokerage Houses etc

F a m o u s S t o c k M a r k e t Q u o t e s & S a y i n g s - Bulls make money. Bears make money. Pigs get slaughtered. Anon. A stock broker is one who invests other peoples money until its all gone. -Woody Allen, American Film Maker
Most investors dont even stop to consider how much business a company does. All they look at are earnings per share and net assets per share. -Kenneth L Fisher, Stock Market Guru.

L a t e s t S t o c k M a r k e t N e w s : Bombay Stock Exchange, National Stock Exchange, Mutual Funds News, Company News, Auto, Steel and Lots More

ADVFN offer FREE streaming stocks and shares data form around the world. SEE MORE | FREE Portfolio Manager | Check your investments real -time with ADVFN's FREE stock charts | FREE stock quote Stock Market Terms - Definition and Meaning
Stock Market Terms - S h a r e M a r k e t T e r m i n o l o g y - I n v e s t m e n t D e f i n i t i o n s ,

Financial Term Meaning A to Z

Application-Money A s s e t C o v e r a g e A s s e t Financing, Auction Market, Auctioning of an Issue, Automated Screen

A - A c t i v e S h a r e , Amortization,

Averaging, Bear Cycle, Book Profit, Booking Profit, Broker, Book Value, BSE Sensitive Index or SENSEX, Bullion, Buy and Hold Strategy, Call Money, Capital Asset, , Capital Market, Cash Cow, CD or Cum Dividend, Certificate of Deposit, Certified Cheque, Chinese Wall, Circuit Breaker, Clearing, Clone Fund, , Collection Ratio, Commodities Market, Commodity, Compound Growth Rate, , Correction, Cost-Benefit Analysis, Cover, Covered Call, Creeping Acquisition,
Trading (AST), Average,

CRISIL, Cum-Dividend or CD, Crossing, Cum-Rights or CR, Cumulative Preference Shares,

Discounted Debentures, Discounting, Dividend Cover, Dividend Play, Dividend Rollover Plan,

Cyclical Shares - Daily Margin, Dawn Raid, Debentures, Defensive Investment, Defensive Stock, Delisting, Deflation, Delivery Order, Delivery Price, Dematerialization of Scripts, Depreciation, Derivative,

Theory, Depository Receipt, Efficient Market Hypothesis, Eligible Securities, ELSS, Employee
Buyout, Employee Participation, Employee Share Ownership Plan, Equity Shareholders, Eurodollar, FIFO or First In First Out, FII, Fill or Kill Order, Fixed Income Investments, Floating Stock, Floor Broker, Floor Trader, FForward Dealing / Trading, Forward Delivery, Forward Shares, Forward Integration, Free Lunch Theorem, Free Market Economy, Front End Load, Front Running, Frozen Assets, Fully Diluted Earnings Per Share, Fully Paid Share Capital, Fundamental Analysis, Futures, Futures Contract, Futures Market Glamour Shares, Godfather Offer, Going Long, Going Private, Going Public, Going Short, Gold Certificates, Golden Handcuffs, Golden Handshake, Golden Share, Good Delivery, Good Faith Deposit, Graham and Dodd Strategy of Investment, Great Crash, Gross, Gross National Product

Dow

(GNP), Growth Shares, Gun Jumping, Glamour Issue.Havala or Hawala (also, Making Up Price, Head and Shoulders, Hedging Against Inflation,Inefficient Market, Insider, Insider Trading, Insolvency, Institutional Investor, Intangible Assets, Interbank Market, Interest Rate Risk, International Finance Corporation, International Monetary Fund, Inventory, Inventory Turnover, Inverted Yield Curve, Investment Analyst, Investment Club, Investment Company, Investment Company Shares (Close Ended), Investment Company Shares (Open Ended), Investment Horizon, Investment Letter, Investment Trust, Investor Protection, IPO, Irredeemable Debentures, Issue Price. MORE - Share Market Terms

A stock option is a specific type of option with a stock as the underlying instrument (the security that the value of the option is based on). Thus it is a contract to buy (known as a "call" contract) or sell (known as a "put" contract) shares of stock, at a predetermined or calculable (from a formula in the contract) price. It is Having the Rights to purchase a corporation's stock at a specified price. Infact There are two definitions of stock options. 1. The right to purchase or sell a stock at a specified price within a stated period. Options are a popular investment medium, offering an opportunity to hedge positions in other securities, to speculate on stocks with relatively little investment, and to capitalize on changes in the market value of options contracts themselves through a variety of options strategies. 2. A widely used form of employee incentive and compensation.In some Companies, Stock options constitute part of remuneration. Employee stock options are stock options for the company's own stock that are often offered to upperlevel employees as part of the executive compensation package. An employee stock option is identical to a call option on the company's stock, with some extra restrictions. Performance Stock Options are Options that vest if pre-determined performance measures are achieved. The performance goal (revenue growth, stock-price increases) must be reached for the options to be exercisable or for the vesting to be accelerated

Online Stock Trading is a recent way of buying and selling stocks. Now you can buy and sell any stock over the Internet for a low price and you dont need to call up a broker. You can buy any stock and sell any stock and it doesnt take much to get started. All you need is a brokerage account. A broker that I use is Scottrade http://www.scottrade.com/ and you can start an account with them for $500 and their commissions are only $7, so they are not expensive at all. Once you have setup a brokerage account you then need to choose an investment method and then research different companies and then buy stock in the ones that you feel will go up because they are good sound companies. So as you can see there are several benefits to online stock trading but lets recap.

With online stock trading all you need is $500 to open a brokerage account, the brokerage commissions are low at Scottrade theyre only $7 and you can buy and sell your stocks from your home computer anytime that the stock market is open. Well now that you know that you can do online stock trading with a minimal investment you should get started today and then start learning about the stock market and choose the stocks you want to invest in.

One say's "I bought "XYZ Company" at Rs.2200 and immediately after I bought the stock price dropped to Rs.2000." I feel sad. Another comes with a different version "I sold "XYZ Company" at Rs.2000 and it went up to Rs.2400 same evening" I made an imaginary loss of Rs.400 per share. Solution: You can buy more shares @ Rs.2000 and reduce your overall buying cost. This has to be done only if believe in the fundamentals,management and the future prospects of the company. To do this you need to keep money ready.whatever money you have and want to invest,split it into two parts. Then keep 50% cash aside, only invest with other 50%.So if need to buy more of any stock when the price falls you have ready cash. Also now if you have 200 shares of XYZ Company 100 @ Rs.2200 and 100 @ Rs.2000.Then the price goes up to Rs.2400. Sell only 100 of the shares.Then if the price further shot up, you have some shares to sell And participate in the rally to make money. Next, You sold the share and the price went up. The solution to this is never sell all the shares at one time. Sell only 50% of your shares.So if he price goes up later you still have the other 50% to sell and make profit. The golden Rule is to first do your own analysis of the stock before investing and buy on tips . Also invest only in companies which declare dividends every year. To be sure that you are not investing in loss making companies. Every Market expert advise to do your stock analysis before investing in the stock market. But nobody tells you how. Well in my next article I will write about how to do stock analysis using various tools such as financial ratios and by checking the track records of the companies you plan to invest in. P.S: If you are not Indian then replace the Rs. into your own local currency to understand the article

Technical Analysis is a method of evaluating future security prices and market directions based on statistical analysis of variables such as trading volume, price changes, etc., to identify patterns. A stock market term - The attempt to look for numerical trends in a random function. The stock market used to be filled with technical analysts deciding what to buy and sell, until it was decided that their success rate is no better

than chance. Now technical stock analysis is virtually non-existent. The Readers Submitted Examples page has more on this topic. Research and examination of the market and securities as it relates to their supply and demand in the marketplace. The technician uses charts and computer programs to identify and project price trends. The analysis includes studying price movements and trading volumes to determine patterns such as Head and Shoulder Formations and W Formations. Other indicators include support and resistance levels, and moving averages. In contrast to fundamental analysis, technical analysis does not consider a corporation's financial data. Technical analysts study trading histories to identify price trends in particular stocks, mutual funds, commodities, or options in specific market sectors or in the overall financial markets. They use their findings to predict probable, often short-term, trading patterns in the investments that they study. The speed (and advocates would say the accuracy) with which the analysts do their work depends on the development of increasingly sophisticated computer programs. Technical Analysis supposes markets have memory.If so, past prices, or the current price momentum, can give an idea of the future price evolution. Technical Analysis is a tool to detect if a trend (and thus the investor's behavior) will persist or break. It gives some results but can be deceptive as it relies mostly on graphic signals that are often intertwined, unclear or belated. It might become a source of representiveness heuristic (spotting patterns where there are none) Technical analysis has become increasingly popular over the past several years, as more and more people believe that the historical performance of a stock is a strong indication of future performance. The use of past performance should come as no surprise. People using fundamental analysis have always looked at the past performance of companies by comparing fiscal data from previous quarters and years to determine future growth. The difference lies in the technical analyst's belief that securities move according to very predictable trends and patterns. These trends continue until something happens to change the trend, and until this change occurs, price levels are predictable. There are many instances of investors successfully trading a security using only their knowledge of the security's chart, without even understanding what the company does. However, although technical analysis is a terrific tool, most agree it is much more effective when used in combination with fundamental analysis. Fundamental Analysis Fundamental analysis looks at a shares market price in light of the companys underlying business proposition and financial situation. It involves making both quantitative and qualitative judgements about a company. Fundamental analysis can be contrasted with 'technical analysis, which seeks to make judgements about the performance of a share based solely on its historic price behavior and without reference to the underlying business, the sector it's in, or the economy as a whole. This is done by tracking and charting the companies stock price, volume of shares traded day to day, both on the company itself and also on its competitors. In this way investors hope to build up a picture of future price movements. Technical Analysis is a method of evaluating future security prices and market directions based on statistical analysis of variables such as trading volume, price changes, etc., to identify patterns. A stock market term - The attempt to look for numerical trends in a random function. The stock market used to be filled with

technical analysts deciding what to buy and sell, until it was decided that their success rate is no better than chance. Now technical stock analysis is virtually non-existent. The Readers Submitted Examples page has more on this topic. Research and examination of the market and securities as it relates to their supply and demand in the marketplace. The technician uses charts and computer programs to identify and project price trends. The analysis includes studying price movements and trading volumes to determine patterns such as Head and Shoulder Formations and W Formations. Other indicators include support and resistance levels, and moving averages. In contrast to fundamental analysis, technical analysis does not consider a corporation's financial data. Technical analysts study trading histories to identify price trends in particular stocks, mutual funds, commodities, or options in specific market sectors or in the overall financial markets. They use their findings to predict probable, often short-term, trading patterns in the investments that they study. The speed (and advocates would say the accuracy) with which the analysts do their work depends on the development of increasingly sophisticated computer programs. Technical Analysis supposes markets have memory.If so, past prices, or the current price momentum, can give an idea of the future price evolution. Technical Analysis is a tool to detect if a trend (and thus the investor's behavior) will persist or break. It gives some results but can be deceptive as it relies mostly on graphic signals that are often intertwined, unclear or belated. It might become a source of representiveness heuristic (spotting patterns where there are none) Technical analysis has become increasingly popular over the past several years, as more and more people believe that the historical performance of a stock is a strong indication of future performance. The use of past performance should come as no surprise. People using fundamental analysis have always looked at the past performance of companies by comparing fiscal data from previous quarters and years to determine future growth. The difference lies in the technical analyst's belief that securities move according to very predictable trends and patterns. These trends continue until something happens to change the trend, and until this change occurs, price levels are predictable. There are many instances of investors successfully trading a security using only their knowledge of the security's chart, without even understanding what the company does. However, although technical analysis is a terrific tool, most agree it is much more effective when used in combination with fundamental analysis. Fundamental Analysis Fundamental analysis looks at a shares market price in light of the companys underlying business proposition and financial situation. It involves making both quantitative and qualitative judgements about a company. Fundamental analysis can be contrasted with 'technical analysis, which seeks to make judgements about the performance of a share based solely on its historic price behavior and without reference to the underlying business, the sector it's in, or the economy as a whole. This is done by tracking and charting the companies stock price, volume of shares traded day to day, both on the company itself and also on its competitors. In this way investors hope to build up a picture of future price movements.

What is NET ASSET VALUE ?

The Term Net Asset Value (NAV) is used by investment companies to measure net assets. It is calculated by subtracting liabilities from the value of a fund's securities and other items of value and

dividing this by the number of outstanding shares. Net asset value is popularly used in newspaper mutual fund tables to designate the price per share for the fund. The value of a collective investment fund based on the market price of securities held in its portfolio. Units in open ended funds are valued using this measure. Closed ended investment trusts have a net asset value but have a separate market value. NAV per share is calculated by dividing this figure by the number of ordinary shares. Investments trusts can trade at net asset value or their price can be at a premium or discount to NAV. Value or purchase price of a share of stock in a mutual fund. NAV is calculated each day by taking the closing market value of all securities owned plus all other assets such as cash, subtracting all liabilities, then dividing the result (total net assets) by the total number of shares outstanding. Calculating NAVs - Calculating mutual fund net asset values is easy. Simply take the current market value of the fund's net assets (securities held by the fund minus any liabilities) and divide by the number of shares outstanding. So if a fund had net assets of Rs.50 lakh and there are one lakh shares of the fund, then the price per share (or NAV) is Rs.50.00. IPO Initial Public Offering Public issues can be classified into Initial Public offerings and further public offerings. In a public offering, the issuer makes an offer for new investors to enter its shareholding family. The issuer company makes detailed disclosures as per the DIP guidelines in its offer document and offers it for subscription. Initial Public Offering (IPO ) is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuers securities. IPO is New shares Offered to the public in the Primary Market .The first time the company is traded on the stock exchange. A prospectus is issued to read about its risk before investing. IPO is A company's first sale of stock to the public. Securities offered in an IPO are often, but not always, those of young, small companies seeking outside equity capital and a public market for their stock. Investors purchasing stock in IPOs generally must be prepared to accept very large risks for the possibility of large gains. Sometimes, Just before the IPO is launched, Existing share Holders get a very liberal bonus issues as a reward for their faith in risking money when the project was new How to apply to a public issue ? When a company floats a public issue or IPO, it prints forms for application to be filled by the investors. Public issues are open for a few days only. As per law, any public issue should be kept open for a minimum of 3days and a maximum of 21 days. For issues, which are underwritten by financial institutions, the offer should be kept open for a minimum of 3 days and a maximum of 21 days. For issues, which are underwritten by all India financial institutions, the offer should be kept open for a maximum of 10 days. Generally, issues are kept open for only 3 to 4 days. The duly complete application from, accompanied by cash, cheque, DD or stock invest should be deposited before the closing date as per the instruction on the from. IPO's by investment companies (closed end funds) usually contain underwriting fees which represent a load to buyers.

Before applying for any IPO , analyse the following factors:

1. Who are the Promoters ? What is their credibility and track record ? 2. What is the company manufacturing or providing services - Product, its potential 3. Does the Company have any Technology tie-up ? if yes , What is the reputation of the collaborators 4. What has been the past performance of the Company offering the IPO ? 5. What is the Project cost, What are the means of financing and profitability projections ? 6. What are the Risk factors involved ? 7. Who has appraised the Project ? In India Projects apprised by IDBI and ICICI have more credibility than small Merchant Bankers

How to make payments for IPOs: The payment terms of any IPO or Public issue is fixed by the company keeping in view its fund requirements and the statutory regulations. In general, companies stipulate that either the entire money should be paid along with the application or 50 percent of the entire amount be paid along with the application and rest on allotment. However, if the funds requirements is staggered, the company may ask for the money in calls, that is, the company demands for the money after allotment as and when the cash flow demands. As per the statutory requirements, for public issue large than Rs. 250 crore, the money is to be collected as under: 25 per cent on application 25 per cent on allotment 50 per cent in two or more calls
Annual General Meeting - AGM AGM or Annual General Meeting is a Meeting held once a year where the directors of the company report to the shareholders on the years performance and nay vacancies in the board of directors are filled by shareholders consent. The chief of the company comments on the future outlook of the company, and answers questions from shareholders. Notice of the meeting, along with a copy of the ANNUAL REPORT (or an abridged version of it) has to be compulsorily sent to every shareholder, who may send a proxy to attend on his behalf. Shareholders can insist that all resolutions on company policy be voted upon by the equity shareholders of the company. This meeting also receives the auditors report, appoints auditors, and fixes their remuneration. Aging Schedule Aging Schedule - This is prepared by a companys auditor on the basis of trade ACCOUNTS RECEIVABLE, of great importance to the companys sources of credit, its sales staff, and FUNDAMENTAL ANALYSTS. The schedule is a list of amounts receivable by the months in which they were created, and a list of receivables by maturity-classified as current or in various stages of default. It suggests where collection efforts should

be concentrated, and helps assess whether the companys reserves are adequate enough to cover bad debts. It also helps formulate the companys future sales policy.

These days, you can't retire without using the returns from investments. You can't count on your social security checks to cover your expenses when you retire. It's barely enough for people who are receiving it now to have food, shelter and utilities. That doesn't account for any care you may need or in the even that you need to take advantage of such funds much earlier in life. It is important to have your own financial plan. There are many kinds of investments you can make that will make your life much easier down the road. The following are brief descriptions for beginning investors to familiarize themselves with different kinds of investment options: 401K Plans The easiest and most popular kind of investment is a 401K plan. This is due to the fact that most jobs offer this savings program where the money can be automatically deducted from your payroll check and you never realize it is missing. Life Insurance Life Insurance policies are another kind of investment that is fairly popular. It is a way to ensure income for your family when you die. It allows you a sense of security and provides a valuable tax deduction. Stocks Stocks are a unique kind of investment because they allow you to take partial ownership in a company. Because of this, the returns are potentially bigger and they have a history of being a wise way to invest your money. Bonds A bond is basically a promise note from the government or a private company. You agree to give them a set amount of money as a loan and they keep it for a set number of years with a predetermined amount of interest. This is typically a safe bet and one that is a good investment for a first time investor because there is little risk of losing your money. Mutual Funds Mutual funds are a kind of investment that are based on the gains and losses of a shareholder. Basically one person manages the money of several or many investors and invests in a list of various stocks to lessen the effect of any losses that may occur. Money Market Funds A good short-term investment is a Money Market Fund. With this kind of investment you can earn interest as an independent shareholder. Annuities If you are interested in tax-deferred income, then annuities may be the right kind of investment for you. This is an agreement between you and the insurer. It works to produce income for you and protect your earning potential. Brokered Certificates of Deposit (CDs) CDs are a kind of investment where you deposit money for a set amount of time. The good thing about CDs is that you can take the money out at any time without paying a penalty fee. We all know life isn't predictable, so this is a nice feature to have in your option.

Real Estate Real Estate is a tangible kind of investment. It includes your land and anything permanently attached to your piece of property. This may include your home, rental properties, your company or empty pieces of land. Real estate is typically a smart and can make you a lot of money over time Generally, most shares have a face value (i.e. the value as in a balance sheet) of Rs.10 though not always offered to the public at this price. Companies can offer a share with a face value of Rs.10 to the public at a higher price. The difference between the offer price and the face value is called the premium. As per the SEBI guidelines, new companies can offer shares to the public at a premium provided : 1.The promoter company has a 3 years consistent record of profitable working. 2.The promoter takes up at least 50 per cent of the shares in the issue. 3.All parties applying to the issue should be offered the same instrument at the same terms, especially regarding the premium. 4.The propectus should provide justification for the propose premium. On the other hand, exisiting companies can make a premium issue without the above restrictions. A companys aim is to raise money and simultaneously serve the equity capital. As far as accounting is concerned, premium is credited to reserves and surplus and it does not increase the equity. Therefore, a company which raises Rs.100 crores by way of shares at say Rs.90 premium per share increases its equity by only Rs.10 crores, which is easier to service with an investment of Rs.100 crores. Thus the companies seek to make premium issues. As well shall see later, a premium issue can increase the book value without decreasing the EPS. In a buoyant stock market when good shares trade at very high prices, companies realize that its easy to command a high premium.

Many people confuse trading with investing. They are not the same. The biggest difference between them is the length of time you hold onto the assets. An investor is more interested in the long-term appreciation of his assets, counting on that historical rise in market equity. Hes not generally concerned about short-term fluctuations in prices, because hell ride them out over the long haul. An investor relies mostly on Fundamental Analysis, which is the analytical method of predicting longterm prospects of a particular asset. Most investors adopt a buy and hold approach to assets, which simply means they buy shares of some company and hold onto them for a long time. This approach can be dangerous, even devastating, in an extremely volatile market such as todays BSE or NSE Indexs Show. Lets consider someone who bought shares of XYZ Company at their peak value of around Rs.650 per share at the beginning of the year 2000. Two years later, those shares are worth Rs.100 each. If that investor had spent Rs. 65,000/-, his net loss would be Rs.55000/- ! I dont know about you, but losing Fifty Five Thousand Rupees would be a relatively big loss for me.

Many investors suffer such losses regularly, hoping that in five or ten or fifteen years the market will rebound, and theyll recoup their losses and achieve an overall gain. What most investors need to remember is this: investing is not about weathering storms with your beloved company its about making money. Traders, on the other hand, are attempting to profit on just those short-term price fluctuations. The amount of time an active trader holds onto an asset is very short: in many cases minutes, or sometimes seconds. If you can catch just two index points on an average day, you can make a comfortable living as an Trader. To help make their decisions, Traders rely on Technical Analysis, a form of marketing analysis that attempts to predict short-term price fluctuations.

The stock markets are at all time highs and just like the last time around when the market was at its previous high every one thinks that nothing can go wrong and there is just one way where the market can go which is UP. Nothing could be farther from the truth and this will be clear from the way the market behaves in the next few months. Here are a few tips that would hopefully save you from losing a lot of cash in the current frenzy. Time and again investors have burnt their fingers in the markets and here are some tips to you so that you do not end up burning your fingers in this market. The number one tip at this point would be to sell if you have stocks and not to buy them if you have cash. The golden principle in the markets is Buy when everyone else sells and sell when everyone else buys. Simple enough right? Not really. Why? Because of peer pressure pure and simple. When everyone else around you seems to be having a ball at the markets you would feel like a fool if you didnt participate now. OK so you cant resist buying at this time then at least do yourself a favor and stay away from unknown Penny Stock and hot tips that your barber gave you. True that the stock has tripled in the last fifteen days but that was before people like your barber started buying the stock. Chances are that the Promoter of the company have started buying into the stock and have spread rumors like acquisition or a big export order to fool investors and sell out to them at a later date. Another tip that would serve useful is to value a stock based on its future growth and not its past performance. For instance many investors say that I will not buy stocks of X company because it has doubled in the last year. Well it may have doubled in the last year but that should not be the thing you should be telling yourself. Rather you should ask yourself why has this doubled in the last year and can it do so again? There should be a solid answer to your question like the launch of a new product or reduction in the prices of raw material. And indeed if the answer is in the positive then by all means go ahead and buy that stock regardless of what has happened in the last year. Another tip would be to remember what you are buying. Quite simply investors often forget that when buying a stock they are simply buying ownership in the companies. Most of you would know that nothing spectacular would happen in the company that you work for, in a month, they are not going to double their revenues and certainly not double your salary every month. Then why expect anything different from the companies that you are investing in. Why expect the prices to double in a month or two. Give time to your investments; dont reduce it to a gamble. Only when you invest in fundamentally sound companies and

then give the investments sufficient time to grow will you see some healthy returns on your investments. Ideally a minimum horizon of one year is a good time. Hope these tips will prove helpful and you will make a lot more in the stock markets than you have already been making. Happy Investing!
The author is MBA Finance and is part of the Mint India team. More about Mint is given below: The Indian stock markets provide an excellent opportunity to diligent investors who are willing to spend time and effort on the stocks that they buy. Money is there to be made by people who are willing to spend time understanding the business model, risks faced and other nuances about the company that they are buying.Increasingly the investor is becoming more sophisticated and has stopped looking for hot tips and stories about stocks, which can double overnight.Mint is aimed at people who understand that stock markets are not a gamble but reward investors who work hard understanding the companies that they are buying and then give time to their investments to grow and generate handsome returns. Mint's mission is to help such people learn more about the stocks available in the markets, more about macro and micro economic concepts that impact the markets and more about the industry in general to enable the investors to make an informed and profitable decision.

Stocks & Shares Education

1. You can tell if a Stock is cheap or expensive by the Price to Earnings Ratio. False: PE ratios are easy to calculate, that is why they are listed in newspapers etc. But you cannot compare PEs on companies from different industries, as the variables those companies and industries have are different. Even comparing within an industry, PEs dont tell you about many financial fundamentals and nothing about a stocks value.

2. To make Money in the Stock Market, you must assume High Risks. False: Tips to Lower your Risk: Do not put more than 10% of your money into any one stock Do not own more than 2-3 stocks in any industry Buy your stocks over time, not all at once Buy stocks with consistent and predictable earnings growth Buy stocks with growth rates greater than the total of inflation and interest rates Use stop-loss orders to limit your risk 3. Buy Stocks on the Way Down and Sell on the Way Up. False: People believe that a falling stock is cheap and a rising stock is too expensive. But on the way down, you have no idea how much further it may fall. If a stock is rising, especially if it has broken previous highs, there are no unhappy owners who want to dump it. If the stock is fairly valued, it should continue to rise. 4. You can Hedge Inflation with Stocks. False: When interest rates rise, people start to pull money out of the market and into bonds, so that pushes prices down. Plus the cost of business goes up, so corporate earnings go down, along with the stock prices.

5. Young People can afford to take High Risk. False: The only thing true about this is that young people have time on their side if they lose all their money. But young people have little disposable income to risk losing. If they follow the tips above, they can make money over many years. Young people have the time to be patient.

Traditionally, saving has been viewed as quite different from investing. In most savings alternatives, the initial amount of capital or cash remains constant, earning guaranteed rates of interest. The capital value of investments can go up or down. Returns are not guaranteed. However, creation of money market funds and deregulation of the banking industry have resulted in a variety of savings options that earn variable rates of return. Savings provide funds for emergencies and for making specific purchases in the relatively near future (generally within two years). The primary goal is to store funds and keep them safe. This is why savings are generally placed in interest-bearing accounts that are safe (such as those insured or guaranteed by the federal government) and liquid (those in the form of cash or easily changed into cash on short notice with minimal or no loss). However, these generally have low yields. Because of the opportunities for earning a higher return with a relatively small pool of funds, some financial experts suggest that savers consider slightly higher risk (but liquid) alternatives for at least part of their savings. Saved money is insurance. It is insurance against risk, against losing your job, against having a major unexpected repair bill or medical expense in the family. It is the backbone of you and your familys financial well-being. Saved money grants you financial security. And the more you save, the more financial secure and independent you will be. The goal of investing is generally to increase net worth and work toward long-term goals. Investing involves risk. Risk of your stocks losing money, or even going bankrupt (Enron, MCI, the airlines, etc. etc.). Risk of interest rates rising, and bond prices falling. Risks of your broker swindled you, or coerced you though his sales pitch to buy speculative investments. Risks of the economy. Risks of a particular industry. Risk of losing your principal. Risk of losing it all, and then some (such as with margin calls).

Trying to win in the stock market without a trading plan is like trying to build a house without blueprints costly mistakes are inevitable. Why do you need a Trading Plan? 1 - During trading hours, emotions will turn smart people into idiots. Therefore, you have to avoid having to make decisions during those hours. For every action you take during trading hours, the reason should not be greed or fear. The reason should be because it is in the plan. With a good plan, your task becomes one of patience and discipline. 2 - Consistent results require consistent actions - consistent actions can only be achieved through a detailed plan. What should be in your trading plan? 1 - Your strategy to enter and exit trades You have to describe the conditions that have to be met before you enter a trade. You also have to describe the conditions under which you will close a position. These conditions may include technical

analysis, fundamental analysis, or a combination of both. They may also include market conditions, public sentiment, etc... 2 - Your Money management rules to keep losses small - the goal of money management is to ensure your survival by avoiding risks that could take you out of business. Your money management rules should include the following: - Maximum amount at risk for each trade. - Maximum amount at risk for all your opened positions. - Maximum daily and weekly amount lost before you stop trading 3 - Your daily routine - after the market closes, before it opens, etc... 4 - Activities you carry out during the weekend. 5 - I also like to include reminders that I read every day I will follow a trading plan to guide my trading - therefore my job will be one of patience and discipline. - I will always keep my trading plan simple. - I will take actions according to my trading plan, not because of greed, fear, or hope. - I will not deceive myself when I deviate from my trading plan. Instead I will admit the error and correct it. I will have a winning attitude. - Take responsibility for all your actions dont blame the market or world events. - Trade to trade well and for the love of trading, not to trade often and not for the money. - Dont be influenced by the opinions of others. - Never think that taking money from the market is easy. - Dont try to guess the future trading is a game of probabilities. - Use your head and stay calm dont get excited or depressed. - Handle trading as a serious intellectual pursuit. - Dont count how much money you have made or lost while you are in a trade - focus on trading well. A trading plan will not guarantee you success in the stock market but not having one will pretty much guarantee failure.

The Securities and Exchange Board of India (SEBI), the capital market watchdog, Thursday cracked down on some of the top brokerage firms and banks for their alleged involvement in an initial public offering (IPO) scam. SEBI conducted investigations in respect of all the IPOs from January 2003 to December 2005. The findings of investigations, prima facie, revealed violations of serious nature by several key operators, their financiers, concerned depository participants and the depositories. In its order, SEBI has barred brokerage firms like Karvy Stockbroking and IndiaBulls from the market. It has also directed HDFC Bank and IDBI Bank not to open new demat accounts for share transactions. SEBI's Order fallout:

24 entities banned from primary and secondary market, including Indiabulls, Karvy Securities Quasi-judicial proceedings against Karvy DP and Pratik DP, banned from the market 12 DPs cant open fresh demat accounts, including HDFC Bank, IDBI Bank, Central Bank, ING Vysya Bank, IL&FS and Motilal Oswal; 15 more under scrutiny, including ICICI Bank, Citibank, Stanchart 85 Financiers barred from the market.

SEBI said certain entities had cornered shares reserved for retail applicants in the name of fictitious entities in the initial public offerings of Yes Bank and Infrastructure Development Finance Company (IDFC). Each of the fictitious application was of small value so as to be eligible for allotment under the retail category, it added. After the allotment, these fictitious beneficiaries transferred these shares to their principals who in turn transferred the shares to their financiers. The financiers in turn sold most of these shares on the first day of listing, thereby realizing the windfall gain of the price difference between IPO price and the listing price.
AFTER TAX After-Tax When one is investing in loan instruments like debentures or bonds or fixed deposits, and when one is an income-tax payer, it is the after-tax return which is the real return, not the rate of interest. The relevant rate of interest on the investors slab of income should be deducted from the earnings, and the actual return compared with returns from tax-sheltered instruments, such as tax-free bonds. Stock Options Trading - The Safer Bet When I bought the futures of XYZ Company with great hopes of making a quick buck I had not foreseen the other side of the picture i.e. making great loss. The lot size on the contract was 950, which meant that for every single rupee up or down move in the stock I stood to gain or lose Rs. 950, a substantial amount by any standards. The market took a dip and my stock ended up lower by Rs. 40. In other words I lost Rs. 38000 in just a couple of weeks. Although I had time till the end of the month when the contract expired but I closed my position taking the loss. Another lower tick on the stock would have required additional margin money from me. Did it leave me any wiser? I sure hope so because that is when I did some research and came up with a safer bet in the form of stock options. Most Indian traders use stock futures due to the profit potential or lack of knowledge of stock options. The risk involved in stock futures makes options much more attractive. The difference in buying a stock future and option is that the later is not obligatory. The future is an agreement to buy or sell a security at a certain time in the future at a specified price, an option gives one the right but not the obligation to do the same. This right to buy or sell in options comes at a price, which is called the premium. Types of option: There are two types of options call option and put option. A call option gives the buyer the right to buy a security on a future date at a predetermined price; Put option gives him the right to sell a security on a certain day at a certain price. The future price is called the strike price.

Benefits of Stock Options gives the buyer the right Not the obligation To buy or sell A specified underlying At a set price On or before a specified date Now let us see how it works out : The stock of xyz is trading at Rs. 100 and you expect it to go up to 150

In cash segment you buy 100 shares and pay Rs. 10000, (100 shares x Rs. 100)

If the stock reaches your target of 150 you make Rs 5000 by selling your 100 shares at Rs. 150/share

If the stock falls by Rs. 50 you make a loss of Rs. 5000 by selling your 100 shares at Rs. 50/share In futures you buy a contract of 500 shares (lot size) of the same share for Rs. 50,000 (500 shares x Rs. 100)

If the price reaches 150 you make a profit of 25000 (500 shares x Rs. 50)

If the price falls to Rs. 50 you make a loss of 25000

In options you buy a call option (right to buy a security) for 500 shares at a strike price of Rs. 105 paying a premium of Rs. 2500 (assuming a premium of Rs. 5 per share for 500 shares) If the price reaches 150 a profit of Rs. 45 per share (Rs. 150-Rs. 105) the net profit after deducting the premium of Rs. 5 per share paid by you gives you a profit of Rs. 40 per share or a total amount of Rs. 20000 ( 500 shares x Rs. 40) The option shows its advantage if the price drops by Rs. 50. You have only bought the right to exercise an option to buy. Therefore if for some adverse reason the stock price plummets your loss is limited to the amount of premium you have paid in this case Rs. 2500 ( the premium paid by you for the right to buy 500 shares at Rs. 105) As is clear from the example, options have a clear advantage in limiting your risk. Buying a call option is a bullish stance where you expect the price of stock to rise and buying a put option is a bearish stance and you expect the price of stock to fall.

Selling options can be as risky as futures. The seller or writer of an option takes a huge risk in case of unfavorable price movements. He only profits from the premium he collects from the option buyer for providing assurance to buy or sell securities at a pre determined price. Investing!! What's that?

Judging by the fact that you've taken the trouble to navigate to this page my guess is that you don't need much convincing about the wisdom of investing. However, I hope that your quest for knowledge/information about the art/science of investing ends here. Read on. Knowledge is power. It is common knowledge that money has to be invested wisely. If you are a novice at investing, terms such as stocks, bonds, futures, options, Open interest, yield, P/E ratio may sound Greek and Latin. Relax. It takes years to understand the art of investing. You're not alone in the quest to crack the jargon. To start with, take your investment decisions with as many facts as you can assimilate. But, understand that you can never know everything. Learning to live with the anxiety of the unknown is part of investing. Being enthusiastic about getting started is the first step, though daunting at the first instance. That's why my investment course begins with a dose of encouragement: With enough time and a little discipline, you are all but guaranteed to make the right moves in the market. Patience and the willingness to invest your savings across a portfolio of securities tailored to suit your age and risk profile will propel your revenues and cushion you against any major losses. Investing is not about putting all your money into the "Next big thing," hoping to make a killing. Investing isn't gambling or speculation; it's about taking reasonable risks to reap steady rewards.
Investing is a method of purchasing assets in order to gain profit in the form of reasonably predictable income (dividends, interest, or rentals) and appreciation over the long term. Why should you invest? Simply put, you should invest so that your money grows and shields you against rising inflation. The rate of return on investments should be greater than the rate of inflation, leaving you with a nice surplus over a period of time. Whether your money is invested in stocks, bonds, mutual funds or certificates of deposit (CD), the end result is to create wealth for retirement, marriage, college fees, vacations, better standard of living or to just pass on the money to the next generation or maybe have some fun in your life and do things you had always dreamed of doing with a little extra cash in your pocket. Also, it's exciting to review your investment returns and to see how they are accumulating at a faster rate than your salary. When to Invest? The sooner the better. By investing into the market right away you allow your investments more time to grow, whereby the concept of compounding interest swells your income by accumulating your earnings and dividends. Considering the unpredictability of the markets, research and history indicates these three golden rules for all investors 1. Invest early

2. Invest regularly 3. Invest for long term and not short term

While its tempting to wait for the best time to invest, especially in a rising market, remember that the risk of waiting may be much greater than the potential rewards of participating. Trust in the power of compounding. Compounding is growth via reinvestment of returns earned on your savings. Compounding has a snowballing effect because you earn income not only on the original investment but also on the reinvestment of dividend/interest accumulated over the years. The power of compounding is one of the most compelling reasons for investing as soon as possible. The earlier you start investing and continue to do so consistently the more money you will make. The longer you leave your money invested and the higher the interest rates, the faster your money will grow. That's why stocks are the best long-term investment tool. The general upward momentum of the economy mitigates the stock market volatility and the risk of losses. Thats the reasoning behind investing for long term rather than short term. How much to invest? There is no statutory amount that an investor needs to invest in order to generate adequate returns from his savings. The amount that you invest will eventually depend on factors such as:

1 Your risk profile

2. Your Time horizon

3. Savings made

Remember that no amount is too small to make a beginning. Whatever amount of money you can spare to begin with is good enough. You can keep increasing the amount you invest over a period of time as you keep growing in confidence and understanding of the investment options available and So instead of just dreaming about those wads of money do something concrete about it and start investing soon as you can with whatever amount of money you can spare.

There are two ways for investors to get shares from the primary and secondary markets. In primary markets, securities are bought by way of public issue directly from the company. In Secondary market share are traded between two investors. PRIMARY MARKET Market for new issues of securities, as distinguished from the Secondary Market, where previously issued securities are bought and sold. A market is primary if the proceeds of sales go to the issuer of the securities sold . This is part of the financial market where enterprises issue their new shares and bonds. It is characterised by being the only moment when the enterprise receives money in exchange for selling its financial assets. SECONDARY MARKET The market where securities are traded after they are initially offered in the primary market. Most trading is done in the secondary market. To explain further, it is Trading in previously issued financial instruments. An organized market for used securities. Examples are the New York Stock Exchange (NYSE), Bombay Stock Exchange (BSE),National Stock Exchange NSE, bond markets, over-the-counter markets, residential mortgage loans, governmental guaranteed loans etc.

Are you wondering what a stock broker is and what they do? Heres your answer.

A stock broker is a person or a firm that trades on its clients behalf, you tell them what you want to invest in and they will issue the buy or sell order. Some stock brokers also give out financial advice that you a charged for. It wasnt too long ago and investing was very expensive because you had to go through a full service broker which would give you advice on what to do and would charge you a hefty fee for it. Now there are a plethora of discount stock brokers such as Scottrade http://www.scottrade.com now you can trade stocks for a low fee such as $7 total. I can think of three different types of stock brokers. 1. Full Service Broker - A full-service broker can provide a bunch of services such as investment research advice, tax planning and retirement planning. 2. Discount Broker A discount broker lets you buy and sell stocks at a low rate but doesnt provide any investment advice. 3. Direct-Access Broker- A direct access broker lets you trade directly with the electronic communication networks (ECNs) so you can trade faster. Active traders such as day traders tend to use Direct Access Brokers So as you can tell there a few options for a stock broker and you really need to pick which one suits you needs.

In order to understand what stocks are and how stock markets work, we need to dive into history-specifically, the history of what has come to be known as the corporation, or sometimes the limited liability company (LLC). Corporations in one form or another have been around ever since one guy convinced a few others to pool their resources for mutual benefit. The first corporate charters were created in Britain as early as the sixteenth century, but these were generally what we might think of today as a public corporation owned by the government, like the postal service. Privately owned corporations came into being gradually during the early 19th century in the United States , United Kingdom and western Europe as the governments of those countries started allowing anyone to create corporations. In order for a corporation to do business, it needs to get money from somewhere. Typically, one or more people contribute an initial investment to get the company off the ground. These entrepreneurs may commit some of their own money, but if they don't have enough, they will need to persuade other people, such as venture capital investors or banks, to invest in their business. They can do this in two ways: by issuing bonds, which are basically a way of selling debt (or taking out a loan, depending on your perspective), or by issuing stock, that is, shares in the ownership of the company. Long ago stock owners realized that it would be convenient if there were a central place they could go to trade stock with one another, and the public stock exchange was born. Eventually, today's stock markets grew out of these public places. Stocks

A corporation is generally entitled to create as many shares as it pleases. Each share is a small piece of ownership. The more shares you own, the more of the company you own, and the more control you have over the company's operations. Companies sometimes issue different classes of shares, which have different privileges associated with them. So a corporation creates some shares, and sells them to an investor for an agreed upon price, the corporation now has money. In return, the investor has a degree of ownership in the corporation, and can exercise some control over it. The corporation can continue to issue new shares, as long as it can persuade people to buy them. If the company makes a profit, it may decide to plow the money back into the business or use some of it to pay dividends on the shares. Public Markets How each stock market works is dependent on its internal organization and government regulation. The NYSE (New York Stock Exchange) is a non-profit corporation, while the NASDAQ (National Association of Securities Dealers Automated Quotation) and the TSE (Toronto Stock Exchange) are for-profit businesses, earning money by providing trading services. Most companies that go public have been around for at least a little while. Going public gives the company an opportunity for a potentially huge capital infusion, since millions of investors can now easily purchase shares. It also exposes the corporation to stricter regulatory control by government regulators. When a corporation decides to go public, after filing the necessary paperwork with the government and with the exchange it has chosen, it makes an initial public offering (IPO). The company will decide how many shares to issue on the public market and the price it wants to sell them for. When all the shares in the IPO are sold, the company can use the proceeds to invest in the business.
There are two classic market types used to characterize the general direction of the market. Bull markets are when the market is generally rising, typically the result of a strong economy. A bull market is typified by generally rising stock prices, high economic growth, and strong investor confidence in the economy. Bear markets are the opposite. A bear market is typified by falling stock prices, bad economic news, and low investor confidence in the economy.
A bull market is a financial market where prices of instruments (e.g., stocks) are, on average, trending higher. The bull market tends to be associated with rising investor confidence and expectations of further capital gains.

A market in which prices are rising. A market participant who believes prices will move higher is called a "bull". A news item is considered bullish if it is expected to result in higher prices.An advancing trend in stock prices that usually occurs for a time period of months or years. Bull markets are generally characterized by high trading volume. Simply put, bull markets are movements in the stock market in which prices are rising and the consensus is that prices will continue moving upward. During this time, economic production is high, jobs are plentiful and inflation is low. Bear markets are the opposite--stock prices are falling, and the view is that they will continue falling. The economy will slow down, coupled with a rise in unemployment and inflation. A key to successful investing during a bull market is to take advantage of the rising prices. For most, this means buying securities early, watching them rise in value and then selling

them when they reach a high. However, as simple as it sounds, this practice involves timing the market. Since no one knows exactly when the market will begin its climb or reach its peak, virtually no one can time the market perfectly. Investors often attempt to buy securities as they demonstrate a strong and steady rise and sell them as the market begins a strong move downward. Portfolios with larger percentages of stocks can work well when the market is moving upward. Investors who believe in watching the market will buy and sell accordingly to change their portfolios.Speculators and risk-takers can fare relatively well in bull markets. They believe they can make profits from rising prices, so they buy stocks, options, futures and currencies they believe will gain value. Growth is what most bull investors seek. What is a Bear Market? The opposite of a bull market is a bear market when prices are falling in a financial market for a prolonged period of time. A bear market tends to be accompanied by widespread pessimism.A bear market is slang for when stock prices have decreased for an extended period of time. If an investor is "bearish" they are referred to as a bear because they believe a particular company, industry, sector, or market in general is going to go down.

Investing in Indian Real Estate

by Rajinder Dogra Indian Real Estate: "Undeniably tremendous!" And, that is the undeniable verdict of a Price Waterhouse Coopers study conducted on the investment environment in terms of Indian real estate. Ever since the Government of India gave its stamp of approval to 100% foreign direct investment (FDI) in housing and real estate, NRIs, overseas real estate developers, hoteliers, and others have been tracking a path to the sub-continent. Sensing the business potential for developing serviced plots, constructing residential / commercial complexes, business centres / offices, mini-townships, investments in infrastructure facilities e.g. roads, bridges, manufacture of building materials, etc., FDI is flooding in to take advantage of the tremendous real estate opportunities. Indian Real Estate: Growing Potential The increasing demand for Indian real estate has not only generated employment, it has also been instrumental in the growth of steel, cement, bricks and other related industries. Estimated to be in the region of US $12-billion, real estate development in India is growing by as much as 30% each year. Already, eighty percent of Indian real estate has been developed for residential space, and 20% comprises of shopping malls, office space, hospitals and hotels. Fuelled largely due to off-shoring / outsourcing of BPOs, call centres, high-end technology consulting and software development and programming firms, real estate growth in India has great investment prospectives. Indian Real Estate: Investment Opportunities Tax reform measures in the last few years have ensured real estate in India is one of the most productive investment sectors, with money invested in real estate offering regular returns on investment including appreciating in value. And, the Government of India by opening up 100% foreign direct investment, and fiscal reforms like stamp duty and property tax reductions, setting up real estate mutual funds has turned real estate into a promising investment option. Already, it has approved the first Rs. 100-crore FDI project in Gurgaon. With urban populations expected to grow from 290-million to 600-million by 2021, housing requirements are expected to top 68-million by 2021, which means India's urban housing sector could do with an investment of US $25-billion over a 5year period. Poised for rapid urbanisation, 3 out of 10 of the world's largest cities are in India. An influx of jobs due to off-shoring / outsourcing has resulted in rising disposable incomes, increased consumerism, factors responsible for changing the face of residential and commercial real estate in India. Wishing to take advantage of real estate investment opportunities, banks and housing finance companies are falling over themselves to tie-up with developers or offer project loans at competitive rates.

Indian Real Estate: Foreign Direct Investment (FDI) Recent government policies have seen to it that inbound FDI for housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure, no longer requires prior government approval, with the exception of the Reserve Bank of India (RBI). It is important that all inward remittances or issues of shares to NRIs are reported to RBI within 30-days, and all FDI in the above areas is subject to the following conditions: Minimum area for development under each project is as under: Serviced housing plots, minimum requirement of 10 hectares. Construction-development projects, minimum built-up area requirement of 50,000 sq. metres. Combination project, either of the above two conditions suffices. Investment is further subject to the following conditions: Minimum capital investment = US$10 million for a wholly owned subsidiary, and US$5 million for joint ventures with Indian partners. Further, the funds have to be brought in within six months of commencing business. It is not permissible to repatriate original investment before a period of three years from the date of minimum capital investment. However, if the investor gets prior approval from the Government through FIPB, early exit is permitted. Fifty percent of the project is to be completed within 5-years from the date of obtaining all legal clearances. No undeveloped plots can be sold where roads, street lighting, water supply, drainage, sewerage and other conveniences are not available. Serviced housing plots can only be sold if the investor has provided infrastructure and obtained a completion certificate from the concerned local body / service agency. Development has to be in accordance with town master plans, planning norms, standards, and local byelaws. The investor is responsible for obtaining all necessary approvals, including building / layout plans, internal / external / peripheral area development, infrastructure facilities, payment for development and other charges. All development has to be in compliance with State Government / Municipal / Local Body requirements that are prescribed under applicable rules / bye-laws / regulations. Further, Non Resident Indians (NRIs) are allowed investment under the Automatic Route of FDI in the following Housing and Real Estate Sector: Services plot development and construction of built-up residential premises. Real estate investment covering construction of residential / commercial premises including business centres, offices, etc. Development of townships. City / regional level urban infrastructure facilities, including roads and bridges. Investment in manufacture of building materials. Investment in participatory ventures in (i) to (v) above Investment in housing finance institutions. Permissible FDI private / joint / state investment in construction in the export processing zones (EPZS) / special economic zones (SEZS) is as follows: 100% FDI real estate investment within Special Economic Zone (SEZ). 100% FDI for developing a township within the SEZ i.e. residential areas, markets, playgrounds, clubs, recreation centres etc.

Standard Design Factory (SDF) building development in existing Special Economic Zones. SEZ land may be leased or sub-leased to developers as per relevant guidelines for this purpose. Full freedom to allocate developed plots to approved SEZ units on commercial basis including competent authorities for provision of water, electricity, security, restaurants, recreation centres etc. along commercial lines. As you read this, a wide spectrum of changes are and have taken place in Indian real estate. Various proposed reforms e.g. removal of tenancy laws, computerization of land records, correction in taxation structure etc., are ensuring India emerges as a favoured and profitable destination for real estate developers / investors, both domestic and international. Every day I see in the financial section of newspapers how to forecast what the market will do in 6 months, 12 months, several years. Ten stocks that will double in the next 6 months. Right! I have trouble trying to forecast what it will do tomorrow. Do not trust any who claims he knows what the future will be for the market. Of course, your broker will send you gobs of slick material about various companies that predict they will double or triple in the next 12 months. On the New York Stock Exchange there will be about one half of one per cent (0.5%) of companies that will double this year. Are you smart enough to pick those winners? Im not and I am considered a professional trader. And I am sure your broker isnt either. He just wants to make a commission and is probably promoting a stock his brokerage company wants to push. Every investor wants to know the future and will send money to some expert who will send him news about a company that only (?) he knows. And pigs can fly. One thing about the market. It is almost impossible to keep a secret and everyone knows everything about other companies. As soon as some analyst finds a cogent fact that can influence a stock price he will share that secret with a few close friends. Within minutes the secret is known by hundreds of thousands and is immediately reflected in the price of the stock. If you do get sucked into one of these money traps by some smooth-talking salesman or newspaper verbiage I strongly suggest you immediately plan your exit strategy. Without an exit plan you can easily lose a large amount of your investment. This is not an investment; it is a gamble and should be treated as such. The first thought of any professional trader is if I am wrong how much am I willing to lose? Maybe 2%, 5%, certainly no more than 10%. Pros understand that small losses are OK, but never take a big loss. From 1982 to 2000 it seemed everyone was a financial genius. How many of those folks kept those big winnings from 2000? Almost none. Most lost 40% to 60% of their money. Brokers said, Hang in there. You are in for the long haul. Unfortunately he did not tell you that Modern Portfolio Theory is based on a 40 year time line. Yes, but understand you dont need to predict anything. Dont forecast. What you can easily learn is follow the major trend. You bought in 1982 and you sold out in 2000. The trend can be found in many ways with the simplest being posted every day in Investors Business Daily newspaper under the IBD Mutual Fund Index. When the Index price is above the 200-day moving average you own equities and when it is below you are in cash or bonds. Nothing complicated, Dont try to forecast the market. Let the market trend tell you.

12 Basic Stock Investing Rules Every Successful Investor Should Follow

There are many important things you need to know to trade and invest successfully in the stock market or any other market. 12 of the most important things that I can share with you based on many years of trading experience are enumerated below.

1. Buy low-sell high. As simple as this concept appears to be, the vast majority of investors do the exact opposite. Your ability to consistently buy low and sell high, will determine the success, or failure, of your investments. Your rate of return is determined 100% by when you enter the stock market. 2. The stock market is always right and price is the only reality in trading. If you want to make money in any market, you need to mirror what the market is doing. If the market is going down and you are long, the market is right and you are wrong. If the stock market is going up and you are short, the market is right and you are wrong. Other things being equal, the longer you stay right with the stock market, the more money you will make. The longer you stay wrong with the stock market, the more money you will lose. 3. Every market or stock that goes up will go down and most markets or stocks that have gone down, will go up. The more extreme the move up or down, the more extreme the movement in the opposite direction once the trend changes. This is also known as "the trend always changes rule." 4. If you are looking for "reasons" that stocks or markets make large directional moves, you will probably never know for certain. Since we are dealing with perception of markets-not necessarily reality, you are wasting your time looking for the many reasons markets move. A huge mistake most investors make is assuming that stock markets are rational or that they are capable of ascertaining why markets do anything. To make a profit trading, it is only necessary to know that markets are moving - not why they are moving. Stock market winners only care about direction and duration, while market losers are obsessed with the whys. 5. Stock markets generally move in advance of news or supportive fundamentals - sometimes months in advance. If you wait to invest until it is totally clear to you why a stock or a market is moving, you have to assume that others have done the same thing and you may be too late. You need to get positioned before the largest directional trend move takes place. The market reaction to good or bad news in a bull market will be positive more often than not. The market reaction to good or bad news in a bear market will be negative more often than not. 6. The trend is your friend. Since the trend is the basis of all profit, we need long term trends to make sizeable money. The key is to know when to get aboard a trend and stick with it for a long period of time to maximize profits. Contrary to the short term perspective of most investors today, all the big money is made by catching large market moves - not by day trading or short term stock investing. 7. You must let your profits run and cut your losses quickly if you are to have any chance of being successful. Trading discipline is not a sufficient condition to make money in the markets, but it is a necessary condition. If you do not practice highly disciplined trading, you will not make money over the long term. This is a stock trading system in itself.

8. The Efficient Market Hypothesis is fallacious and is actually a derivative of the perfect competition model of capitalism. The Efficient Market Hypothesis at root shares many of the same false premises as the perfect competition paradigm as described by a well known economist. The perfect competition model is not based on anything that exists on this earth. Consistently profitable professional traders simply have better information - and they act on it. Most non-professionals trade strictly on emotion, and lose much more money than they earn. The combination of superior information for some investors and the usual panic as losses mount caused by buying high and selling low for others, creates inefficient markets. 9. Traditional technical and fundamental analysis alone may not enable you to consistently make money in the markets. Successful market timing is possible but not with the tools of analysis that most people employ. If you eliminate optimization, data mining, subjectivism, and other such statistical tricks and data manipulation, most trading ideas are losers. 10. Never trust the advice and/or ideas of trading software vendors, stock trading system sellers, market commentators, financial analysts, brokers, newsletter publishers, trading authors, etc., unless they trade their own money and have traded successfully for years. Note those that have traded successfully over very long periods of time are very few in number. Keep in mind that Wall Street and other financial firms make money by selling you something - not instilling wisdom in you. You should make your own trading decisions based on a rational analysis of all the facts. 11. The worst thing an investor can do is take a large loss on their position or portfolio. Market timing can help avert this much too common experience. You can avoid making that huge mistake by avoiding buying things when they are high. It should be obvious that you should only buy when stocks are low and only sell when stocks are high. Since your starting point is critical in determining your total return, if you buy low, your long term investment results are irrefutably better than someone that bought high. 12. The most successful investing methods should take most individuals no more than four or five hours per week and, for the majority of us, only one or two hours per week with little to no stress involved.

There are several ways to profit from a falling stock, but for tonight we are going to discuss the two most basic principals, shorting stock versus buying "put" options. If you have been with us for any length of time you know I have written many times about how to "short" a stock. Basically you are simply selling a stock now, taking in the cash for the sale, and "buying back" or covering the sale at a cheaper price. so if you "short" ABC at 60 dollars and you sold 1000 shares, you took in 60,000 dollars. Now if ABC falls to 50, and you "Cover" you are buying it back cheaper. In this case you will spend 50,000 dollars. The difference between where you sold and what you spent, 10 G's is your profit.

That really is as easy and as basic as it gets friends. Don't let all the talking heads throw you a curve ball, shorting is easy and its really no more risky than going long as long as you use stops to protect yourself. Since the market goes up and down, if you only play the long side, you are missing a lot of profit potential. But there are problems with this approach. First you need a margin account to do it, all short sales are through margin. Second, it eats up a lot of your buying power because when you go short, you are holding that position with margin that will tie up your money. The other play is a put option. Here again Wall Street has tried to buffalo the average investor into thinking options are for the big boys. What nonsense! Anyone can and should use call and put options as a trading strategy. The risk is limited, and the returns can be phenomenal because of the leveraging inherent in options. With a put option, you are placing a bet that the stock is going to fall. Win the bet and you will win big time. Lose the bet and just like Vegas, your loss is limited to how much you bet. If the market is going to run up for a few weeks and then spiral back down, which way should you play? That is impossible to say, we don't know your style, your risk tolerance, your bank account balance etc. but for us it's an easy call, put options win out over shorting in a scenario like that. By using put options we can use a relatively small amount of money to be in several "plays" and each of them could return several hundred percent returns. Look at it like this. If you short ABC at 100 and it falls to 60 fantastic! You made 40 points and 40%. But if you buy put options for 1.75 and they go to 10.00, what is the percentage there? Over 500%. And look at the cost. It's next to nothing, to get such a shot at big returns. For our money, when the time is right, buying puts against the Dow Jones Industrials, the NASDAQ 100 and the Composite and select individual stocks that carry high P/E's will be the way to go as we feel those will be taken to the woodshed for a spanking. Financial markets provide their participants with the most favorable conditions for purchase/sale of financial instruments they have inside. Their major functions are: guaranteeing liquidity, forming assets prices within establishing proposition and demand and decreasing of operational expenses, incurred by the participants of the market. Financial market comprises variety of instruments, hence its functioning totally depends on instruments held. Usually it can be classified according to the type of financial instruments and according to the terms of instruments paying-off. From the point of different types of instruments held the market can be divided into the one of promissory notes and the one of securities (stock market). The first one contains promissory instruments with the right for its owners to get some fixed amount of money in future and is called the market of promissory notes, while the latter binds the issuer to pay a certain amount of money according to the return received after paying-off all the promissory notes and is called stock market. There are also types of securities referring to both categories as, e.g., preference shares and converted bonds. They are also called the instruments with fixed return. Another classification is due to paying-off terms of instruments. These are: market of assets with high liquidity (money market) and market of capital. The first one refers to the market of short-term promissory notes with assets age up to 12 months. The second one refers to the market of long-term promissory notes with instruments age surpasses 12 months. This classification can be referred to the bond market only as its instruments have fixed expiry date, while the stock markets not. Now we are turning to the stock market.

As it was mentioned before, ordinary shares purchasers typically invest their funds into the companyissuer and become its owners. Their weight in the process of making decisions in the company depends on the number of shares he/she possesses. Due to the financial experience of the company, its part in the market and future potential shares can be divided into several groups. 1. Blue Chips Shares of large companies with a long record of profit growth, annual return over $4 billion, large capitalization and constancy in paying-off dividends are referred to as blue chips. 2. Growth Stocks Shares of such company grow faster; its managers typically pursue the policy of reinvestment of revenue into further development and modernization of the company. These companies rarely pay dividends and in case they do the dividends are minimal as compared with other companies. 3. Income Stocks Income stocks are the stocks of companies with high and stable earnings that pay high dividends to the shareholders. The shares of such companies usually use mutual funds in the plans for middle-aged and elderly people. 4. Defensive Stocks These are the stocks whose prices stay stable when the market declines, do well during recessions and are able to minimize risks. They perform perfect when the market turns sour and are in requisition during economic boom. These categories are widely spread in mutual funds, thus for better understanding investment process it is useful to keep in mind this division. Stock Trading Psychology by Tim Renolds Many of today's highly successful traders will tell you that the general key to success in trading is to be able to comfortably take a loss. It is general knowledge among experts in the trading psychology field and among traders that the market is not predictable and it is safe to say that it never will be. In the world of trading, it is expected to take a loss; even those who are highly skilled traders know that it is inevitable. With that said, let us have a look at things you as a trader should be aware of, how you can take a loss effectively and use it towards the greater good of your trading world.

Trading psychology tells us that when a trader loses he begins to become somewhat of a perfectionist in his dealing. Many traders think that in trading, a good day will always be one that is profitable. Trading psychology experts tells us this is not true. A trader should define a good day as one where they have extensively researched and planned with discipline and focus, and have followed through to the entire extent of the plan. Yes, when a trader has mastered the art of accepting losses and working through them with a well thought out plan then good days will become profitable in time. Because the art of trading in an unpredictable market fluctuates so greatly from one day to the next, experts in trading psychology believe that it is important that you concentrate on what you can control,

instead of things that are beyond your control. Looking into the short-term you cannot expect to be able to control the profits of your trading. With that said, look at what you do you have ability to control. You do have the ability to control the difference between good and bad days. You are able to control this factor by extensively researching the strategies you implement within your trading experiences. By learning to research your chosen strategies, thus controlling the amount of good and bad trading days you experience, you will, in the long-term begin to generate profits, which is the ultimate goal of every trader. Trading psychology experts tell us that it is important to become realistic in trading instead of becoming a perfectionist. Perfectionist traders, relate a loss with failure, and will become obsessed with the failure, focusing only upon it. Realistic traders understand the unpredictability of the market and taking a loss is simply part of the art. The main key you must remember in trading psychology to be able to effectively limit your losses, instead of becoming obsessed with them. A common thing seen within the trading psychology world is that traders who are obsessed with their losses often have a hard time bouncing back from them, thus losing in the end. Experts in trading psychology have organized three basic strategies you can use to effectively stop losses. These strategies are: * Price Based * Time Based * Indicator Based Stops that are priced based are generally used when the other two have not functioned. To make this work you will need to make hypothesis's about the trade and identify a low point in that particular market. Then you will set your trade entries near your points, thus making sure that losses will not be overly excessive if the hypothesis fails. Time Based stops constitutes making use of your time. Designate a holding period you allow to capture a certain number of points. If you have no achieved your desired profit within that time limit, you should stop the trade. If effectively used you should stop even if the price stop limit has not been achieved. The Indicator based stop makes use of market indicators. As a trader, you should be aware of these indicators and utilize them extensively within your trading experiences. Look at indicators such as, volume, advances, declines, and new highs and lows. Experts in trading psychology say that setting stops and rehearsing them mentally is a good psychological tool to use and will help ensure that you follow through.

What is Fundamental Analysis ? by Joel Arberman Fundamentals are associated with the economic health of a company, measured in terms of revenues, earnings, assets, liabilities, Return on Equity (ROE), Return on Assets (ROA), Return on Investments (ROI), growth prospects and cash flows, etc. The fundamentals tell you about a company. You can say a company is having robust fundamentals if it is growing at a nice pace, generating a profit, has limited debts and abundant cash. The analysis of a company's fundamentals involves getting deep into its financials, rather than day-to-day movement in its share price. Equity researchers normally do fundamental analysis in order to calculate the intrinsic value of a company's stock. If a company's stock is trading above the intrinsic value or fair value, then the stock

is overvalued. If a company's stock is trading below the intrinsic value, then the stock is undervalued. However, if you watch the stock markets very closely, the share price of most companies never matches the fair value. Often, day traders and investors who would prefer short term investment options invest in those stocks, regardless of the companies' long term growth prospects. However, long term investors generally prefer to invest in companies with robust fundamentals and ignore near-term share price movements. The following are various components that constitute a company's fundamentals: Revenues: Revenues (sales) are the total amount of money received by a company through the sales of its goods and services during a specific period of time. Revenues are one of the most important barometers of the growth of a company as it indicates whether there is demand for their products and services. Cash flows: Cash flows are calculated by deducting a company's cash payments from cash receipts over a particular period of time. Cash flows indicate the liquidity position of a company. However, one must pay particular attention to the operating cash flows, since the health of the business can be most clearly seen there. Net income: Net income, which is also called the 'bottom line', is calculated by subtracting from revenue, all of the company's costs, such as operating costs, interest expenses, depreciation, taxes and other expenses associated with running the business. Balance Sheet: Balance sheet is the company's financial statement, which reflects its assets and liabilities. A company's fundamentals are said to be robust if its assets are significantly higher than the liabilities. However, one must carefully analyze companies who are reporting large intangible assets as they may have questionable liquidation value to offset any real liabilities. Return on Assets (ROA): ROA is an Indicator of a company's profitability, which is calculated by dividing the net income for the past 12 months by total average assets of the company. This is one of the important indicators, which long-term investors consider before investing into a particular stock. Although long-term investors and institutional investors consider a company's fundamentals before investing, the share price of a company often does not correspond to the fundamentals - which can present enormous investment opportunities. A company's long-term growth is driven primarily by fundamentals, while a company's share price can be driven by short-term news and investor sentiment, which can be extremely volatile. Every investor must consider a company's fundamentals before investing into its stock if you want to gain stable returns over the long term.

Your Best Stock Market Investment

By Brian Hunter

It has long been said, and not without justification, ,that stock market investment is not for the faint hearted and when you take into account the fact that many investors over the years have lost everything it is not difficult to see why. With the economy seemingly in a constant volatile state it might seem that investing in the right stocks and shares would be an impossible task to do accurately. However, since the invention of the computer, modern information

technology has make stock market investment much easier to access by people from anywhere in the world. It has also facilitated the task of research which is an important part of any stock market investment especially as your money will be riding on all stocks selected for purchase. Today, more than ever, stock market investments seem to be enjoying an all time high but it is as well to remember that fortunes can be lost easier than won. So, for those who would like to get the very best out of their stock market investments, the following advice may prove to be helpful. 1. Investing in the stock market carries inherent risk It is generally believed that there is nothing difficult about buying stocks and, of course, this is quite true. But just buying is not dealing and so the next part of the operation is to sell your stock at a profit and this is where the problems actually start. If you wish to make a profit then you have to wait until the value of the stock begins to rise and, once this happens, to then know at which point to sell for a profit. If you sell too soon you will miss some extra profit but if you wait too long then you may lose out completely should a downturn fall to below your purchase price. In the early days and until you have more experience it is best to be restrained with your outlay - better to lose a little rather than a lot. This is good stock market investment strategy. 2. The 'trailing stop strategy' The most experienced investors incorporate this when getting stocks. This involves 'riding' their stocks high whilst maintaining an exit strategy should things begin to deteriorate. This is where liquidity plays a vital role in their investment as this liquidity can be easily converted to cash should the need arise. 3. Never invest more than you can comfortably afford This really just boils down to common sense; it is quite easy to get carried away should a stock market investment look like a really good buy. However it is wise to always remember that there is always the risk of losing ones money so enthusiasm should always be tempered with judgment and restraint. In this way your best stock market investment will not turn out to be a catastrophe. To sum up, the best advice is to always approach each investment with caution, do the groundwork with regard to research and company background and use an amount of purchasing capital that you are comfortable with and which you can afford to lose. If you heed this advice you will avoid falling into the 'gambling' state of mind which can happen all to easily and which has bankrupted many in the past. Read all you can about stocks and shares, take a few instruction courses (which are readily available) and you will find that your best stock market investment can become a reality.

Stocks and Futures - What is the Difference?

ByRichard Ratchford

Are you new to trading? Perhaps you wonder what the difference is between trading Stocks and trading Futures. Often when I meet someone new who inquires as to what I do, I get a response of "that's like trading stocks, isn't it?" In some ways they are similar, but only minutely so. So let's consider some of the major differences between the two. Most individuals have likely traded stocks at one time or another. Usually, it is to buy in order to 'own' a percentage of a particular company or to liquidate such partial ownership. They pick up a phone to call a

broker or go online to purchase or sell. The order is facilitated through an 'exchange', such as the New York Stock Exchange for example. Buying and selling Futures is similar in this respect. You can call a broker or go online to buy or sell Futures contracts. The order is then facilitated througha commodity exchange, such as the Chicago Merchatile Exchange for example. Yet while buying a stock gives you part ownership in a company or portfolio of companies (as in a fund), buying a Futures contract does not give you ownership of a commodity or product. Rather, you are simply entering into a contract to purchase the underlying commodity at a certain price at a future time, noted by the contract. For example, buying one May Wheat at 3.00 simply creates a contract between you and the seller (whom you need not know as this is taken care of via the exchange) that come May you will take delivery of 5000 bushels of Wheat at $3 per bushel, regardless of what the price of Wheat at market happens to be come May. As a speculator simply trading to make a profit from trading itself and with no interest in actually taking delivery of product, you will simply sell your contract prior to delivery at the going market price and the difference between your buy price and sell price is either your profit or loss. When you buy a stock, you are part owner of a company. When you buy a Futures contract, you simply are entering a contract. With stocks, you will pay for the stock at the time of your purchase plus broker commissions. When buying a futures contract, you are simply entering the buy side of a contract and no monies is paid other than commissions to your broker. Stock exchanges and commodity exchanges are both membership organizations established to act as middlemen between the buys and sells of all types of traders, from business entities to the individual small trader. The stock exchange act to bring capital from investors to the businesses that need that capital. They facilitate the transfer of property rights (ownership in the various companies offering stock).The commodity exchange act to bring people willing to assume risk for the opportunity to make a substantial amount of money for taking such risk. This helps transfer the price risk associated with ownership of various commodities, such as Soybeans, or a service, like interest rates, from producers. To buy stocks, you only need enough money in your account to purchase the stock outright plus commissions. Once you make the purchase, the money is removed immediately to make the purchase. With trading futures, since you are not actually purchasing anything but simply entering a contract to do so at a later time (which you will exit prior to avoid delivery), the broker will require a certain amount of margin (good faith deposit to cover any possible losses) in what is called a 'margin account'. Each commodity has a different minimum margin requirement depending on several factors. Your broker may use the exchange calculated margin or require a different margin of their own. If the value of the commodity were to decrease and you are on the buy side of the contract, then your contract has lost value and your broker will notify you if your unrealized losses exceeds have gone beyond your minimum margin requirement. This is called a 'margin call'. Naturally you would want to have more capital than simply the margin amount when trading futures to avoid these broker calls. The broker has the right (and likely will) liquidate your position if you are getting too close to not having enough to cover the losses in order to protect themselves. With buying stocks outright, there is no potential for a margin call. You simply own the stock outright. So perhaps you may be wondering why anyone would bother buying futures contracts rather than stocks. The major answer is: LEVERAGE. Leverage gives the trader the ability to control a large amount of money (or commodity worth a lot of money) with very little money. For example, if Live Cattle futures requires a minimum margin of $800 to trade a single contract, and a single contract represents 40,000 lbs at the current market price of say 75, you would be controlling $30,000 worth for a leverage of over 35:1. This is appealing to many traders and justifies the risk. What is that risk? Just as leverage can work in your favor, it can work against you at the very same ratio. Known as a 'two-edged sword'.

You can increase the leverage of trading stocks if you trade with a margin account. This usually allows you to purchase stocks on margin at the usual rate of 50%. So for every dollar you have you can purchase $2 worth of stock. The leverage is 2:1. How this works is that the broker is actually 'lending' you the other 50%. Of course by purchasing stock with margin you can lose more than you have due to the leverage. And in this case you can end up getting a 'margin call' from your broker if your stock losses too much value. But trading stocks comes no where close to the kind of leverage you get trading Futures. When you look at these two trading vehicles, the bottom line comes to MARGIN and LEVERAGE.

Understanding The Stock Market

By Jeff Lakie Many people look to the stock market to enhance their hard-earned money more and more each year. Some people are not even aware of their investments, because they can come in the form of pensions with their place of employment. The company invests this money in efforts to increase your retirement funds. In order to fully understand what is happening with your money, you should understand how the investments work.

The stock market is an avenue for investors who want to sell or buy stocks, shares or other things like government bonds. Within the United Kingdom, the major stock market in this area is LSE (London Stock Exchange. Every day a list is produced that includes indexes or companies and how they are performing on the market. An index will be compromised of a special list of certain companies, for example, within the UK; the FTSE 100 is the most popular index. The Financial Times Stock Exchange dictates the average overall performance of 100 of the largest companies with in the UK that are listed on the stock market. A share is a small portion of a PIC (public limited company), owning one of these shares will give you many rights. For example, you will gain a portion of the profits and growth that the company experiences, additionally you will obtain occasional accounts and reports from the chosen company. Another exciting feature of owning a share of a company is the fact that you are given the right to vote in various aspects of what happens with the company. Once you purchase a share of a company you will receive something called a share certificate, this will be your proof of ownership. This certificate will contain the total value of the share, this will likely not be the price that is listed upon the exchange and is specifically for reasons of a legal matter. This will not affect the current value the share currently holds on the market. Typically, as a shareholder, you will receive your profit in the form of a dividend; these are paid on a twice per year basis. The way this works is if the company makes a profit, you will as well and on the opposite end of this spectrum if they do not make a profit, neither will you. If a company does extremely well their value increases, which means the value of the share you own will as well. If you should decide to sell your share, you will only benefit from it, if the company has experienced growth.

Choosing a Stock Market Analyst

by: John Mussi

With so many different companies offering such a wide variety of stocks and bonds, it can be difficult to keep track of which ones are good investments and which ones will cause you to lose money. If you aren't sure how to tell the good stocks from those that aren't so great, or simply don't have the time that you'd need to keep track of all of the different stocks so as to know when it's time to buy or sell, you might want to consider hiring a stock market analyst.

A stock market analyst is an individual, sometimes as a part of an investment firm, whose job it is to watch the changes in the market and keep track of which stocks and bonds are performing well and which ones aren't. If you think that you might be interested in hiring a stock market analyst but aren't sure how you would go about doing so, then the information below should help you begin your search. Find Local Analysts The first step in hiring a stock market analyst is finding one to hire. You can often find listings for market analysts or investment services in your local phone directory, and many analysts are likely to advertise in the financial section of local newspapers and other financial publications. You might also try searching the internet for information about financial analysts in your area. Once you've found the analysts that are closest to your area, it's time to begin investigating the services that they offer and finding the one that's best for your investments. Compare Prices and Services Obviously, stock market analysts are going to charge for their services after all, it's how they make a living. You should take the time to see how much the various analysts in your area charge, and find out exactly what services that price covers. Some market analysts might have several different packages at different prices, offering different services for different amounts so as to cover a variety of different service needs and financial limits. Take some time to compare the prices that each analyst charges and the packages that they offer, and when you've decided upon the one that offers the most services that you desire for the best price begin checking to see how good they are at their job. Check References Taking the time to check references and to see if your potential analyst has any major complaints against them can help you to avoid having to repeat your search in a short period of time. In most cases, you'll find that businesses such as stock market analysts will have customers who are more than willing to allow the analyst to use them as a reference because of good experiences that they've had. If they don't have any references that you can use, take a little time to ask around and see if you can uncover any good or bad experiences that others have had with them in the past. Though it may seem like a lot of work, you want to make sure that the person that you hire will be able to do the job that you're hiring them for. Making Your Decision After you've done some checking around and gone over the information that the analyst has given you again, it's time to make your decision. If it seems as though they'll do a good job in advising you on your stock choices, go ahead and hire them if not, you should continue your search until you can find the one that will.

A Guide to High-Yield, High-Risk Stocks

by: John Mussi The classic image of the stock market is that of a place where fortunes are made and lost throughout the course of the day, and where those who take the biggest risks are rewarded by a hefty payout when all is said and done. Of course, this is the movie version of the market no matter how thrilling the day-to-day dramas of investment trading become, they'll never compete with the images of the stock market that have been created for the silver screen.

There is a small grain of truth to those images from the movies, however those individuals who choose to deal in high-risk stocks can make a lot of money if they handle the risks correctly. If they don't, however, then there's a good chance that they could lose their entire investment. Below you'll find more information on the world of high-risk (and high-yield) investments, including ways to help insure yourself against major losses when dealing with higher levels of investment risk. Defining High-Risk Investments The first thing that needs to be covered when talking about investing in high-yield, high-risk stocks is exactly what is meant by the terms high-risk and high-yield. The risk of the investment is usually due to the very fickle nature of that particular stock though it may be growing in value rather q uickly, it's obvious that the growth is going to stop soon and a very rapid and severe descent is going to begin. The yield of the investment, on the other hand, refers to the money that could potentially be made by buying stocks early on in the increase in price, and then selling just before the value starts to plummet. Fortunes have been both made and lost (sometimes in the same day) with high-risk trading; the key is knowing exactly when to start buying or selling. How to Trade High-Risk Stocks When trading high-risk stocks, it's almost essential that you have access to your brokerage account and that you'll be able to buy or sell shares as soon as the price begins to fluctuate in one direction or the other. This can be done online, via the telephone, or in person if you don't use an online brokerage firm. You can also usually set up hold orders which will start buying the stock when the price reaches a certain level (up to the amount that you've specified) and that will begin selling shares as soon as the price drops below a certain point. Many online brokers allow these types of hold orders, and they can allow you to go about your regular day without having to watch the market ticker the entire time. Guarding Against Loss Of course, even with hold orders or a dedicated broker you can still end up losing money when dealing with high-risk stocks that's how they earned their name. In order to minimize this potential for loss it's important to have a well-diversified stock portfolio to fall back on. If your high-risk investments begin to fall in price too quickly and you end up losing money by the time the shares have been sold, the relatively stable value of some of your core portfolio stocks and indexes will help to even out your losses. The fall of the higher-risk stocks might even stimulate some other portions of the market, causing an increase in other stocks in your portfolio. This will help take some of the sting out of your loss, and may end up giving you a greater long-term gain than you might have had from your short-term investment that went sour.

The ABCs Of Stock Options

by: Ken Morris

As a performance incentive many companies are starting to offer employees the option to buy company stock as a part of their compensation packages. These options are referred to as stock options and they provide a unique opportunity for an employee to potentially increase his or her wealth along side company shareholders. The employee receiving company stock options should have a good understanding of the characteristics of the different types of stock options in order to maximize their potential benefits.

A stock option is a right granted by a company to an employee to purchase one or more shares of the companys stock at a set time and predetermined purchase price. The employee benefits when the value of the company stock appreciates over and above the predetermined purchase price following the granting of the stock options, enabling the holder to purchase the company stock at a discount. There are two types of stock options: non-qualified stock options and incentive stock options. Non-qualified stock options (NQSO) are more frequently offered to employees than Incentive Stock Options because of their flexibility and minimal requirements. NQSOs afford the employee the right to purchase a set number of employer shares at a specific, predetermined price. If the employee wishes to acquire the employer stock then he or she will exercise the option and purchase the employer stock at the predetermined (exercise) price. If the stocks value has appreciated over and above the predetermined price the employee has received the benefit of acquiring the stock at a discount. The difference between the exercise price and the market value (commonly referred to as the bargain element) will be taxable income to the employee as ordinary income, potentially as high as 35%. The other type of stock option is the Incentive Stock Option (ISO). In direct contrast to a nonqualified stock option, there is no income tax consequence when an employee exercisers the option to buy the employer stock. The difference between the exercise price and the market value (bargain element) is only taxable upon the ultimate sale of the employer stock. In other words, a gain is only recognized when the employer stock is sold and not when the option is exercised. If the stock is held the appropriate time period before being sold, all the gains recognized may qualify for long-term capital gains treatment, a maximum rate of 15%. Being able to take part in an ISO program allows an employee to receive a number of tax saving benefits. But with these tax benefits comes added complexity to keep track of and to understand. For example, to qualify for the favorable long-term capital gain taxation, the employee must hold the stock for at least two years from the date the ISO was granted and for at least one year from the date the option was exercised. This is commonly referred to as the 2 year / 1 year rule. If the employee sells the stock before these requirements are met, gain on the stock is taxed as ordinary income in the year of the sale, essentially converting the ISO to a non-qualified stock option. An additional complexity of an ISO that should be kept in mind by the employee is the potential for an alternative minimum tax (AMT) consequence upon exercise of an ISO. For this and other reasons, it remains important to work with your financial advisor and tax professional when evaluating the strategies to take full advantage of the opportunities and benefits of stock options. .

The Logic Behind Technical Analysis

by: Geoff Gannon

Let me first say that I do not now engage in technical analysis; nor, have I ever engaged in technical analysis. I do not believe doing so would be a productive use of my time.

Having said that, I do not claim technical analysis has no predictive value. In fact, I suspect it does have some predictive value. The Efficient Market Hypothesis is flawed. It is based upon the (unwritten) premise that data determines market prices. As Graham so clearly put it in Security Analysis: the influence of what we call analytical factors over the market price is both partial and indirect partial, because it frequently competes with purely speculative factors which influence the price in the opposite direction; and indirect, because it acts through the intermediary of peoples sentiments and decisions. In other words, the market is not a weighing machine, on which the value of each issue is recorded by an exact and impersonal mechanism, in accordance with its specific qualities. Rather should we say that the market is a voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion. Ive seen a lot of people cite this quote, without bothering to notice whats really being said. Graham had a very broad mind, much broader than say someone like Buffett. Thats both a blessing and a curse. At several points in Security Analysis (and to a lesser extent in his other works), Graham can not help but explore an interesting topic more deeply than is strictly necessary for his primary purpose. In this case, Graham could have said what many have since interpreted him as saying: in the short run, stock prices often get out of whack; in the long run, they are governed by the intrinsic value of the underlying business. Of course, Graham didnt say that. Instead he chose to describe the stock market in a way that should have been of great interest to economists as well as investors. Data affects prices indirectly. The market is a lot like a fun house mirror. The resulting reflection is caused in part by the original data, but that does not mean the reflection is an accurate representation of the original data. To take this metaphor a step further, the Efficient Market Hypothesis is based on the idea that the original image acts on the mirror to create the reflection. It does not recognize the unpleasant truth that one can interpret the same process in a very different way. One could say it is the mirror that acts on the original image to create the reflection. In fact, that is often how we interpret the process. We say an object is reflected in a mirror. We rarely use the active an object reflects in a mirror. For some reason, when we talk about the market we like to use inappropriate metaphors. We talk about wealth being destroyed when prices fall. Yet, no one talks of wealth being destroyed when the price of some product falls. When the market rises, we talk about buyers, as if there wasnt a sell er on the other side of the trade. Above all else, we talk about the market not as a mere aggregation of trades, but as some sort of object all its own. The Efficient Market Hypothesis does not recognize the true importance of interpretation. Saying that data (publicly available information) acts on market prices omits the key step. After all, the same data is available to every blackjack player. Casinos just dont like the way a card counter interprets that data. The Efficient Market Hypothesis is not the only argument against technical analysis. There is also empirical evidence that questions the utility of technical analysis. However, empirical evidence alone is not sufficient to prove technical analysis has no predictive power. If most knuckleball pitchers had limited success, the knuckleball might be an inherently ineffective pitch, or there might be a better way to throw it. The same is true of technical analysis.

The adjective random is a very strange word. Although it is rarely the definition g iven, the most appropriate definition for random would have to be having no discernible pattern. The word discernible can not be omitted. If it is, we will take too high a view of science and statistics. Theres a great introduction to economics written by Carl Menger which begins: All things are subject to the law of cause and effect. This great principle knows no exception, and we would search in vain in the realm of experience for an example to the contrary. Human progress has no tendency to cast it in doubt, but rather the effect of confirming it and of always further widening knowledge of the scope of its validity. All things are subject to the law of cause and effect; therefore, nothing is truly random. A caused event must have a pattern though that pattern neednt be discernible. Even if one argued there is such a thing as an uncaused event, who would argue that stock price movements are uncaused? We know that they are caused by buying and selling. Stock prices are the effects of purposeful human actions. Several sciences study the causes of purposeful human action; so, it would be hard to argue any human action is uncaused. Furthermore, each of our own internal mental experiences suggests that our purposeful actions have very definite causes. We also know that the actions of some market participants are based in part on price movements. Many investors will admit as much. They may be lying. But, there is plenty of evidence to suggest they arent. If the actions of investors cause price movements, and past price movements are a partial cause of the actions of investors, then past price movements must partially cause future price movements. Technical analysis is logically valid. Not only is it possible that some form of technical analysis might have predictive power; I would argue it necessarily follows from the above assumptions that some form of technical analysis must have predictive power. So, why dont I use technical analysis? I believe fundamental analysis is a far more powerful too. In fact, I believe fundamental analysis is so much more powerful that one ought not to spend any time on technical analysis that could instead be spent on fundamental analysis. I also believe there is more than enough fundamental analysis to keep an investor occupied; so, he shouldnt devote any time to technical analysis. Personally, I feel I am much better suited to fundamental analysis than I am to technical analysis. Of course, there is no reason why this argument should hold any weight with you. I also believe there is sufficient empirical evidence to support the idea that fundamental analysis is a far more powerful tool than technical analysis. Even though I believe there must be some form of technical analysis that does have predictive power, the mental model of investing which I have constructed does not allow for such a form of technical analysis. In other words: logically, there must be an effective form of technical analysis, but practically, I pretend there isnt. Why? Because I believe thats the most useful model. One should ado pt the most useful model not the most honest model. Im willing to pretend technical analysis does not work, even though I know some form of it must work. Really, this isnt all that strange. In science, Im willing to pretend there are random events, eve n though I know there must not be random events. In math, Im willing to pretend zero is a number, even though I know it must not be a number. A model with random events is useful. In most circumstances, a refusal to allow for random events would be harmful rather than helpful. The model with random events is simpler and more workable. The situation is much the same with zero. It isnt a number. To include zero as a number, you would have to put aside the principles of arithmetic. So, we dont do that. In s chool, you were taught that zero is a number, but that there are certain things you must never do with zero. You accepted that, because it was a simple, workable model.

I propose you do much the same in the case of technical analysis. You should recognize the logical validity of technical analysis, but create a mental model of investing in which technical analysis has no utility whatsoever. Copyright 2006 Geoff Gannon

Winning at Stock Trading

by: Gay Redmile

The world of trading and investment can be as frustrating as it can be rewarding! You need to be prepared... Firstly, decide if you are a trader or an investor. An investor is someone who enters the stock market inadvertently - usually via their superannuation policies. A trader is someone who makes a decision to buy and sell shares via the stock market. This can be done online or by using the services of a stock broker. If you decide to become a trader - to win - you must have a survival strategy... You need to study the market yourself - not just rely on 'reading the news', or listening to others advice and tips. Take advantage of technology - computers, software, electronic data - all at your finger tips. Seek out charting software and appropriate internet sites - they are plentiful. Ensure that you 'manage' your money and keep some in reserve. Have the ability to quickly identify failures as well as successes. Stock Market trading appeals to those who are a little adventurous - rather than just placing their capital into bricks and mortar. But - be mindful that portfolio values are less stable than real estate as they are continually moving up and down. However - investing in the Stock Market means that you are putting your money to work - be aware, and enjoy the gains!

Basics of Share Market Indian Share and share market

Share Share is nothing but the Ownership of the company divided into small parts and each part is called as Share or Stock.A person carrying a share of a compnay holds that part of ownership in that company. A person holding maximum shares has maximum ownership like directors, chairman etc.

Share Market A Share market is the place where buying and selling of shares takes place.Nowdays due to internet and advanced technology buying and selling of shares takes place anywhere in india and also from foreign country, there is no need to be physical present in exchanges like NSE and BSE.

Share market and its analysis

Financial markets like NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) are countries economic barometer (a guide to economic growth).
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Stock markets like NSE and BSE enable trading of a company's stock. First let us understand the Working of a share (stock) market To learn more about how you can earn on the stock market, one has to understand how it works. A person want to buy/sell shares in the share market has to first place his/her order with a broker or can do themselves using online trading systems (this will be discussed later). When the buy order of the shares is communicated to the exchange [either NSE {National Stock Exchange} or BSE {Bombay Stock Exchange}]. The order stays in the queue of exchange's other orders and gets executed if the price of that share comes to that value. The shares purchased will be sent to the you either in physical or demat format Rolling Settlement Cycle: (RSC) RSC means when you will get your shares in your demat account or in physical form. In a rolling settlement, each trading day(T) is considered as a trading period and trades executed during the trading day(T) are settled on a T+2 basis i.e. trading day plus two working days. What is Demat account and why it is required? Securities and Exchange Board of India (SEBI) is a board (corporate body) appointed by the Government of India in 1992 with its head office at Mumbai. Its one of the function is helping the business in stock exchanges and any other securities markets. Demat (short form of Dematerialization) is the process by which an investor can get shares (also called as physical certificates) converted into electronic form maintained in an account with the Depository Participant (DP). DP could be organizations involved in the business of providing financial services like banks, brokers, financial institutions etc. DPs are like agents of Depository. Depository is an organization responsible to maintain investor's securities (securities can be shares or any other form of investments) in the electronic form. In India there are two such organizations called NSDL (National Securities Depository Ltd.) and CDSL (Central Depository Services India Ltd.) Investors wishing to open Demat account has to go DP and open the account. Opening the Demat account is as simple as opening the bank account with any bank. As you need bank account to save your money, make cheque payments etc, likewise you need to open a demat account if you want to buy or sell stocks. All shares what you possess will show in your demat account. So you don't have to possess any physical certificates. They are all held electronically in your demat account. As you buy and sell the shares, accordingly your shares will get adjusted in your account. Is a demat account a must? The market regulator, the Securities and Exchange Board of India (SEBI), has made it compulsory to

open the demat account if you want to buy and sell shares. So a demat account is a must for trading and investing. How to start to open a Demat account? You have to approach a DP to open a Demat account. Most banks are DP participants so you may approach them. To have latest list of registered DP please visit websites www.nsdl.co.in and www.cdslindia.com. A broker and a DP are two different people. A broker is a member of the stock exchange, who buys and sells shares on his behalf and also on behalf of his customers.. Following are the documents required to open Demat account. When you approach any DP, you will be guided through the formalities of opening an account. The DP will ask to provide some documents as proof of your identity and address. Below is a list but you may not require all of them. PAN card, Voter's ID, Passport, Ration card, Driver's license, Photo credit card Employee ID card, IT returns, Electricity/ Landline phone bill etc. Do you need any shares to open a Demat account? No. You need not need any shares to open a demat account. A demat account can be opened with no balance of shares. And there is no minimum balance to be maintained either. You can have a zero balance in your account. How much it cost to open a Demat account? The charges for account opening, annual account maintenance fees and transaction charges vary between various DPs. To have latest charges please visit websites of www.nsdl.co.in and www.cdslindia.com Finally After successfully opening the demat account, the DP will allot Beneficial Owner Identification Number, which will be needed to mention for all your future transactions. If you want to sell your shares, you need to place an order with your broker and give a 'Delivery Instruction' to your DP. The DP will debit your account with the number of shares sold. You will receive the payment from your broker. If you want to buy shares, inform your broker about your Depository Account Number, so that the shares bought are credited into your account. Important points to remember while opening online account Make multiple enquiries and try get low brokerage trading and demat account. Also discuss about the margin they provide for day trading. Discuss about fund transfer. The fund transfer should be reliable and easy. Fund transfer from your bank account to trading account and visa versa. Some online share trading account has integrated savings account which makes easy for you to transfer funds from your saving account to trading account. Very important is about service they provide, the research calls, intraday or daily trading tips. Also enquire about their services charges and any other hidden charges if any. And also see how reliable and easy is to contact them in case if any emergency. Emergency closing or

squaring off trades in case of any technical or other problems.

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 - Buy 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.

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 Its 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 its 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 doesnt 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 PriceStop 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 cant sell before buying in delivery trading while its

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 youre 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 cant 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.

Day trading training Strategies for day trading

Main strategy for day Trading The primary strategy of day trading is to earn consistent money on daily basis. Second strategy for day Trading. Observe carefully the stock price movements Stock price movements like 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) and finally Close. (The stock price at which it remains or the final price of the stock when the market closes for a day). One more important factor to watch is stock price fluctuations. Stock price fluctuations means by how many dollars or cents the stock is moving (either up or down). This gives you an idea on what price to buy and at what price to sell (or first sell and then buy). This strategy is very useful for day trading but in fact you get more superior idea (or plan) for TOMORROWS DAY TRADING for this particular stock. Keep a close watch on Supply and Demand - Supply and demand means how many buyers are willing to buy ( this indicates the demand) and how many sellers are aggressive to sell ( this indicates the supply). Always remember the stock price movement depends on supply and demand. Simple thing to remember ( not only in stock market or day trading but also in general life) that more demand and less supply means price is going to move up and if more supply and less demand then price is going to come down. Overcall if you study this strategy carefully then you will come to know whether the people are interested to buy or sell the stock and hence the price moves accordingly that is if see more buyers then the price is going to move up and if you see more sellers then price is going to fall down.
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Day trading made easy

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). Advantages of Day Trading Margin trading In Day trading you get margin on your balance amount means you get more leverages (amount) on your available balance amount to do day trading this concept is called margin trading. Margin trading is only possible in day trading and not in delivery trading. How much extra amount (margin) you are going to get that totally depends on your broker, or your online trading system brokers. Some broker provides 3, 4, 5, and 6 times extra margin. If you do margin trading then you have to square off your open trades on the same day (means if you bought shares then you have to sell and if you sold shares then you have to buy)before market time (that

is 3:30 PM) finishes. Second important advantage is that you have to pay is less brokerage (commissions) on day trading (Intraday) as compared to delivery trading. This brokerage again depends from broker to broker (or on your online trading system). In day trading you can sell and then buy this is called short sell which you cant do in delivery trading. You can sell shares when prices are falling and then buy when price falls further. Disadvantage of Day Trading As you are benefited to get more extra amount to trade (that is margin trading) and get more extra profit it is also equally true that you are also taking more risk of loss. At any cost you have to square off the open transaction before 3:30 PM (especially if you are doing margin trading) at that time the price may not be in your favor.

Information on Day trading tools

A successful day trader or share market trading requires couple of disciplines and following trading requirements PC with internet - If you need to do trading yourself then you need to have a PC or else you can do trading in internet caf also. A PC with good internet connection speed. The internet connection should not be slow or should not face any other problem especially in Day Trading. Online Trading Account (Demat Account) - You need to open online share trading account with any of the available banks or online brokers. If you want to know more about demat account then please go to Basics of share market indian and check in share market and its analysis part.

Day trading stocks

In day trading, traders mostly wish to do buying and selling on small profits or else they look for overbought or oversold shares. Taking into consideration these important points following basic things you should look in for shares while choosing them for day trading. Price Volatility Volume (quantity) What exactly these terms mean and how to use them while Day Trading. Price Volatility The Price volatility means the movement (up and down) of share price should be more (or high) through out the day. In other words the fluctuation in share prices should be on high rate so that it will be easy for you to buy and sell on different prices. Suppose if share is moving up and down in very narrow range then on what price you will buy and sell? So it is always better if you choose shares which have high volatility in price movement. Volume (quantity) Volume means trading quantities. The shares which you choose for day trading should have high volumes (or high traded quantity). Why this is required? The high volume indicates that there is more liquidity. Liquidity means lots of transactions had took place on this share and more people are interested to trade in this share. This will ease your trading job because you will get more exposure to the price to buy and sell at anytime. Due to high volumes there will be also high price fluctuations.

Points to remember for day trading

Following are very important points to be always remember by day traders . Entry & exit points, stop loss limits, profit targets, your desired risk/reward profile, amount of capital to be committed to trades, how long you need to hold the share if incase it is against your favor. For more information go to Day trading techniques

Day trading rules for Indian share market

Its important to do practice or paper trading before you starts actual trading. Following are the few reasons, Very importantly you will come to know how to place buy/sell orders, and will become familiar and perfect about using your trading system. You will gain confidence in yourself. The fear of trading will vanish. It is very important to keep fear away while doing day trading. You will become active to enter and exit the trade. Its vital important that you must be pretty fast to enter and exit the trade (i.e. open positions).

Guide for daily profit in day trading

Dont jump in trend early - Wait and get paper confirmation of trend change, and then plan and do your trades (buy/sell). Dont jump in or do early trades before any trade change confirmation this may damage your capital (bank balance). Dont wait in trade for long time - Suppose that you had done one trade (either buy or sell) but the scrip is not moving either up or down, it is just stable or moving with very low price difference, then you should get out of that trade and look for other scrips. You may encounter these type of situations when indices (NSE or BSE) and not moving (or moving with narrow range). At such time either you wait or come out of trade, dont loose patience and fall under loss. Dont change your trend on volume volatility - Some time you enter in trade by seeing the buy and sell quantities. For example, suppose you brought shares by seeing more buy quantity then sell quantity, expecting more buy quantity may push the share/stock up but after few minutes you see exactly reverse that you see more sell quantity and less buy quantity or both buy and sell high quantity or the difference of buying and selling quantity is decreased as compared to what you had seen before. So this point is very important, dont panic here and sell off your stock, wait and realize the situatio n properly and then take action. This situation comes many times but if you are sure that your share is going to move up then stick to it. Beware of companies acquisition or any announcement by Government - Suppose in the morning, before market begins, you should read or viewed the news of any Indian Company has acquired any foreign company (or part of foreign company) if you see this is actually best news/things that Indian company. But if acquisition amount is far more than expectation then this good news will turn into worst news. The shares of that company will start falling. So you should not get in trade and buy shares you have to wait and watch how market or other people are responding to these shares and once you understand then you can trade. So always watch where the market heading towards and then react. Announcement of Government - You should also be very careful to decide your tarde based on any government announcement. For example, if government has declared any hike in interest rate then its good news for bank stocks and hence the shares will rise but if government has declared 2nd rate hike in very less span of time as company to first one ( stay within duration of one, two month or three month) then this news will be worse for bank stocks, the share may keeping fall during the trading period. So realize and analyze the news and finally watch market behavior and this fall or do trade you will get success.

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Resources to start your day trading in Indian share market

Read financial newspaper like Business Standard, Economics Times, etc. If possible note done the high lights/breaking news with respective company names and keep close watch on them for that day. If possible watch share (stock) market related TV channels like Zee Business, CNBC, etc. In these TV channels you get over all idea/movements of all share prices and markets (BSE, NSE). And also it becomes easy to catch and keep close watch on related companies if any breaking news comes out during that day. Especially some share market related websites always displays current news, market affairs, share market trends, breaking news and various announcement done by company or government which may effect the share market and related companies. So try to access and have all ok on such types of websites before starting trading and also through out the day, if possible. For latest market news, latest stock updates on day to day basis and also latest share market updates which may affect your shares, then please Go here So in short before starting you stock market trading you should be well aware of all the current news of financial market and if possible note down the breaking news or effective news and its related company and keep watch on that share and trade accordingly on that day.

Day traders secrets

Never invest all your money in same sector this method is called as diversification of shares. This will protect your money from downtrends of any particular sector as you can make money from other sector. There are various sectors like IT, Pharmacy, Banking, Steel, Petrol and Oil, construction and infrastructure, auto etc.

Day trading tips

Prepare your Trading Plan Control your Emotions Accept and Limit Losses Don't Over-Trading Strictly maintain stop loss Don't try to get big profits in single trade Check out volumes before buying

Day trading techniques - II

Buy near open price If possible try to buy shares below open price, or at open price. Dont buy shares if price is gone

very high then open price, wait for the price to come down near open price and then buy that stock. Check buying volumes Before buying check out the buying and selling quantity (volumes). If buying volume started increasing then the stock may go up. Check derivative status If possible try to check out the derivative of the stock which you want to buy. If derivative of that particular stock is going up with increasing buying volumes then you can immediately grab (buy) that share/stock. Most of the time it is seen that if the derivative goes up, then its stock or share also goes up. Wait for the target price to buy For example, if buy is given at 150.5 then dont buy below this price, only buy at 150.5 price or slightly higher then price. Because the given buy price may be the resistance price, if it breaks then share price goes up or else may not go up above 150.5. So plan to buy at given targeted price, dont buy below target price. Strictly maintain Stop Loss Strictly maintain the given stop losses. This will help you to prevent from huge loss. Suppose, for moment the share/stock what you bought falls drastically down, then you may end up with huge loss. So always maintain given stop loss. Stop Loss will reduce your loss. Down wait for huge profit in single share/stock If you are getting some profit and if you notice that is not further moving up (its called consolidation) then you have to sell your share/stock and come out of that trade. In this manner, you can earn small profit instead of loss then you can do another trade and again earn small profit. Likewise if you keep earning couple of small profits in a single day then all your small profits will add up to huge profit amount in a single day. Get satisfied in small profit and do multiple trades.

Learn Online Share Trading Online Share Trading India

In Online share trading the trading is done by using computer and internet connection. In other words trading done through computer having internet connection is called online share trading. Instead of going to any share broker you can do trading yourself using online share trading method. In this method you must have a computer and internet connection or else you can make use of internet cafe. Nowadays due to internet facility lots of things have become easier as compared to earlier days. So making use of the great internet facility you can start your own online share trading.
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Online share trading services in India

There are three primary things required to start online share trading. Demat account (Trading account), a computer and internet connection or else you can go to internet cafe.

Online Demat Account You have to open online trading account that is also called as demat account.( If you want to know more about demat account then please go to Basics of share market Indian and check in share market and its analysis section.There are number of share broker agents with whom you can open your trading account. Following are the some of the names of broker agent where you can contact them and open your trading account. www.icicidirect.com, www.sharekhan.com. www.5paisa.com , www.indiabulls.com etc. these are just few agents you will find more. Points to remember while opening your trading account - Enquire about brokerage rates and taxes you have to pay for your trading account. - You have to open the trading account with the agent who is offering you the lowest brokerage rates. - Different brokerage rates are available for different trading methods like delivery trading and intraday (day trading) trading. - Before opening your account try to insist the agent to get demo of there online trading software or terminal and check your reliability and Speed. - Also confirm about there charges and any hidden charges if you have to pay. Please properly verify above points and then decide with whom you would like to open the trading account. Now you have your on online trading account, lets go for another most important requirement needed for you to start your online trading account. Computer Second most important requirement is computer. Nowadays you get very good computer in very affordable price. You may also go for second hand (used) computer but its better to go for new one as they are available for very less prices. Precaution - Get the computer configuration details and price and compare with other shops and then finalize your deal.Because the price of computer varies due to configuration so get proper configuration details. NOTE - If you cant afford to buy a computer, then you can go to Internet caf an d do your trading. This method is also absolutely fine. Internet Connection Third requirement is your internet connection. Nowadays you get internet broadband connection very fast and very importantly at very less price. Following are the companies which provide broad band internet connection. Tata broadband, Sify broad band, Reliance Broad band etc. Precaution - Get proper price range and speed of the internet connection they are going to provide you. The price depends on internet speed and data they provide to you. So get proper confirmation and then go for that companys connection Another option Alternate option for Internet Broad band connection is GPRS connection. GPRS connection is the internet connection has to be activated on your cell phone (mobile phone) and then the cell phone has to be connected to your computer. The GPRS connection is bit cheaper as compared to broad band connection but you may get less speed as compared to broad band connection. The choice is yours.

On the second part the Airtel, Tata Indicom Reliance, Idea etc these all and many other provides GPRS connection and they will help you to set up your mobile phone with your computer for internet access. Above three are the primary requirements for starting your own online share trading. NOTE - If in case if you dont want to purchase a computer and dont want to get internet connection then you can go and trade in internet cafe. This is also absolutely possible and fine. After getting your prime requirement for starting your online share trading now its time to start your share trading. Lets go to next chapter

Things to know before starting your online share trading

Please make a note of following things before starting your online share trading. Must be aware of Share Market - You must be well aware about share trading, knowledge of share market and shares, fully aware of your online trading software or terminal. Refer our website fully - To have basic idea about different types of share trading and other share market related information. Keep yourself updated - It always very important to keep updated yourself about latest news about share market and companies etc. it really helps you in share trading. Share market always reacts to appropriate news For latest market news, latest stock updates on day to day basis and also latest share market updates which may affect your shares, then please Go here Resources - To keep updated yourself you have to read financial newspaper like business standard, economic times etc. On the internet you can access/open financial related websites like www.businessstandard.com , www.economictimes.com , www.capitalmarket.com etc. On these websites you will get all news related to share market, government news, companys announcements etc which will affect the share market. Share market daily open at 9:5 am and closes at 3:30 pm, Saturday and Sunday are holidays for share market. If you open the financial websites before market opens then you will get the idea about todays share market movement, either it is bullish (going up) or bearish (coming down), ( want to know other terms then please check our website ) other information like movement of other Asian markets and USA market which has huge impact on our Indian share market. Asian markets start early then our Indian market. Action Plan - Now you have to plan your action as you are ready will all the information required for share market. Now your action plan is to select shares which are I news or select shares from sector which is in news. Sector like IT, cement, Petrochemical etc. If there is news on any particular companies/shares or on any sector then definitely there will be movement, if the news is appropriate. During market hours also you have to keep alert about news. Always trade or select shares/companies which are involved in news. This is one of the easiest methods of tracking shares and doing trading on them. Also it is also always better that do some study and research before starting your trading. For example note down todays top gainers, top losers, and volume toppers etc and tomorrow keep a close watch on them this is also one method of selecting shares and trading on them. One more very important point is you should be always aware about news like when company is declaring its dividend, companies merger plans, demerger plans, quarter results, major acquisitions,

collaborations etc . This type of news will definitely makes great movement on related company shares.

Learn Online Share Trading

There are very important benefits (advantages) of online share trading over offline share trading. No need to depend on broker First up of all you need not have to depend on any share broker for buying and selling of shares. Depending on broker may result in delay of buying and selling of shares which may in turn result in huge loss or less profit. If you are doing online share trading then you can execute your trades at any time because you are observing every movement of share market right in front of your computer screen. All updates on your computer screen As you have internet connection with you will get all updates of government news, companies announcements, and corporate declaration etc during market hours. Its not so practically for your broker to provide you all the updates and news. So its very important point that you get all news, especially those news which affects share market right in front of your computer screen. Share Market always reacts to appropriate news Independent for your trades On the other part you will get all information of your traders on your computer screen. You can view yourself your profits and losses done and depending on your current situation you can plan your further trades. In other words you are totally independent for your trades from your broker. You are boss of your self.

Problems online share trading

As there are couples of good advantages there are also some technical disadvantages. As every coin have two sides. Disconnection from Internet - In online share trading there is the possibility that your internet connection may get slow or get stopped, this may result in disconnection from share market. At such critical times you have to call your executive (from whom you opened your trading account) and place your order or square off your pending orders. Computer Problem - If your computer stops functioning then this may also result in disconnection from share market at this time also you have contact your executive. Other Problem - Other problems like electricity disconnection. Solution for this is inverter or batter backup. Above all technical problems which may exist at any time and they are beyond our control means not in control.

Online share trading tips

Do not over trade - Do not put all your money in share market. Do not put all your money in single share or single sector - Put or divide your money in multiple shares or sectors. This may reduce the risk of heavy loss. Do not panic or fear - Think twice before making your trade/plan and once done stick to it, dont p anic or fear. Accept Loss - If you trade is going against you and if you are not sure about your trade then immediately accept the loss and come out of your trade. It will save you from heavy loss. Right Opportunity - Do not fall in trade early, wait for right opportunity and then trade. Its very important. "Wait, Watch and then trade you will get success. Everyday is not trading day - Do not force yourself to do trading everyday. Its wrong. If you are not sure about the market movement for that day then it always wise decision to be away from market and not to trade. Keep you greediness away - Most of the people loose in share market due to greediness. Get satisfied I whatever profit you get and come out of that trade and wait for next opportunity. Dont wait to take huge for that single trade.

Analyze the stock prices

The shares may rise or fall due to numerous reasons, some of them are mentioned below. If you at least keep a watch on following factors. You can save yourself been big loss (if shares are falling) or earn good amount (if shares are rising).

A) News
Share market always reacts for appropriate news. Always read financial news like Business Standard and Economics Times etc. or else watch financial news channels. Expansion Plan - Announcement like major expansion plan of a company or entering into other sectors or opening new plants, branches, turnover increase announcement, new product launch etc. Above announcement will have a positive impact on a share market - share may rise. Political News - News like elections in the country or in any particular state, news of any major change in political upfront or in any change in rules will also have major impact on Indian share market. Political news related to any particular State will have major impact on companies located in that state for example major Sugar Companies are located at Uttar Pradesh like Balrampur Chinni, Triveni Engg, Bajaj Hindustan etc. so any major political news especially related

to any sector will have major impact on shares of that sector. Sector News - The shares of Indian share market have different sectors and if any announcement of news by Government for any particular sector will have major impact on shares of that sector. Following are few sectors, few companies and few related news that may affect share prices in Indian Share Market, Sector related news announcement Banking - ICICI, SBI, UTI, Indian Bank etc. Hike or decrease in interest rates, loan rates etc. Oil - PCL, BPCL etc. Hike or decrease in diesel prices, hike or decrease in crude oil prices etc. Retail - Dabur, ITC, etc. News related to any taxes etc. Cement - Indian Cement, Gujarat Ambuja cement etc. Hike or decrease in cement prices. In short sector news will affect shares from that sector. For latest market news, latest stock updates on day to day basis and also latest share market updates which may affect your shares, then please Go here
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B) Impact of Other Asian Market

Most of the time it has been observed and studied that Indian Market (Nifty/Sensex) follows other Asian markets and USA markets. Asian markets like China - Shanghais market, Japan - Nikkei market, Hong Kong - Hang Sung market. Above all Asian markets open early than Indian market. Most of the time Indian market will follow this Asian markets. If these Asian markets open in positive and lead to positive direction than the Indian markets will react in the same manner and vice-versa provided that there is no major news in India. USA market - USA markets like NASDAQ and DOW will also have major impact on Indian market. So, in short in the morning around 9.30 am (Indian market opens at 9.30 am) get all news above USA markets (which opens and closes in our night time which is their day time) and Asian markets and plan yours day trading.

C) Quarterly Results - (Very important)

Quarterly results declared by all Indian Companies will have major impact on that company and hence their shares in Indian share market. Every company declares its quarterly results. If any company declares extra-ordinary results that will definitely affects its shares. Most of all share traders concentrate on much profit and target sales that company had made. If company achieved good profit than they declare dividend, bonus shares etc. This will make positive impact on shares of that company.

D) Fundamental News
Fundamental news means companies own news. Companies own news means future turnover announcements, any change in director body, future releases etc. If the company has good fundamentals likeboard of directors, companies expansion plans, future acquisition etc then its worth to invest in such companies for long term. Individual share - If the share is over bought, then some profit taking will takes place ( price may come

down) and if share is over sold then you may see some buying (price may go up) of those shares with large volumes, than you can plan your trades accordingly.

E) Inflation Rate - (Very important)

Inflation rate is wholesale prices of consumer goods. This rate is declared by Government for every week at Friday (weekend) 12.00 pm. The inflation rate indicates what the wholesale price was for that week. If it is low As compared to previous week, then it is positive news and you may see share prices going up and if the rate is higher as compared to previous week, then it is negative and this may affect share prices negatively and share prices may come down. So keep a watch. Inflation rate declare by Indian Government at every Friday 12.00 pm and trade accordingly. Indian share market reacts to inflation rate.

F) Future/Derivative Expiry - (Very important)

Future/Derivatives has expiry period of one month. Derivatives get expired on last Thursday of a month. Future/Derivative gets expired means you have to sell your future/derivatives which you caring for whole month and buy for next month. Due to this expiry period share traders sell there derivatives, due to which shares prices may come down. If you watch the share market carefully this selling movement starts before one or two days of expiry. So be cautious and plan your trade accordingly. During this expiry period you may see shares prices coming down then you can plan your buying and selling in next month when prices go up.

G) Where to Keep Watch - (for day traders)

Keep a close watch on shares which comes under top gainers, top losers and which are touching all time high. What can be done in after market hours (when market closes at 3.30 pm) you can make a list of all those shares then plan your trade. Touching all time high is positive news.

Good returns with low risk

Investment in delivery based trading

Delivery based trading means buying shares and holding them for certain period of time is called delivery based trading. The shares you bought will be in your demat account. Once you take delivery of shares you can hold them as long as you want. To take delivery of shares, you must have sufficient funds in your account. You dont get any margin to buy shares in delivery. If you have Rs.5000 means you can buy shares worth of Rs.5000 and not more than this.

Tips for shares investment in delivery based trading

Please study following points, carefully, and get best returns in short period of time. Basically, Delivery based trading can be minimum one week, one month or couple of months. How long to hold your scrips/shares will depend on other technical indicators and averages. How to select best scrips There are thousands of shares/stocks, which one is best for delivery trading and which one will give

maximum profit in short period of time. Please have a look following selection criteria points. Points to remember for fundamental screening, 1. Sector - 50% of stocks rise and fall is directly related to the strengths and weakness of its industry group. 2. Never lose more than 1-2% of your total amount on any one trade. 3. Promoters holding more than 40% indicate safety for retail investors. (Promoters - who run the company) 4. FII holding minimum 20 and maximum 25 is safe for retailer, not much volatility. More FII investment = more volatility. 5. Liquidity - buying and selling of shares minimum 1L/day Consistent earnings Generating profit consistently year after year or quarter after quarter EPS Earning per share is calculated by taking a companys net earning and dividing by the numbers of outstanding shares of the stock the company has. Note - Last years EPS would be actual, while current year and forward year EPS would be estimates. P/E Ratio EPS is a great way to compare earnings across companies, but it doesnt tell you anything about how the market values the stock. Thats why fundamental analysts use the P/E ratio, to figure out how much the market is willing to pay for a companys earnings. P/E Ratio = Price of the share/EPS Higher the PE ratio, more people are convinced to pay high for that share expecting higher growth in coming future. Dividend yield It is calculated by taking the amount of dividends paid per share over the course of a year and dividing by the stocks price. Its percentage return a company pays out to its share holder in the form of dividends. The higher the better. Price/Book ratio The higher the ratio the higher price the market is willing to pay for the company above its assets. Its more useful to value investor than growth investor. Price/Sales ratio As with earning a book value, you can find out how much the market is valuing a company by comparing the companys price to its annual sales. Low Price/Sales ratios (below one) are usually thought to be the better investment since their sales are priced cheaply. P/S ratios are usually used only for unprofitable companies, since such companies dont have a P/E ratio. Returns on Equity (ROE) It is used as a general indication of the companys efficiency, in other words, how much profit it is able

to generate given the resources provided by its stockholders. Investors usually look for companies with ROE that are high and growing. Debt to equity ratio This should not be more than 1, and less than 1 indicates company has very less debt. This is very important during market down trend as company has to pay lots of interest ratio beside low profitability. So its good sign, if company has less debt and that is debt equity ratio.

Investment tips in Delivery based trading

Remember following points to increase your profit and reduce losses, Buy shares of different companies Dont ever try to put all your money in single share. Try to get shares of multi ple companies and if possible from different sectors. You will always get benefited by investing in companies of different sectors, because we never know which sector will have good news and which sector will have bad news. Market always reacts for news. Be Patient When you buy shares, they may go down. In share market its general practice that shares go up and down. If they go down than dont panic and sell your shares Most of the investors/traders wait till their shares come to their buying level and then sell, but generally they forget that is the actual buying level of shares and from this level onwards the share price will start moving upwards.

Corporate investment for long term trading

Taking delivery of shares during Q1, Q2, Q3 and Q4 results is very common among investors/traders who knew the historical performance and current market situation of those particular companies or sector, so study historical yearly profits and sales ratios of top companies and buy shares of those companies. Some weeks before, their quarterly results and after declaring their huge growth in quarterly results, obviously share price will shoot up then you may sell your shares and make handsome profit in very few weeks. If you hold bit longer, then you may also get benefited of dividend. If companies make outstanding profit then they may declare dividend. For more guidance or advice on trading on news e-mail us at support@daytradingshares.com

Technical indicators for Delivery based trading

Its very important to make use of technical indicators in Delivery based trading.

As this topic is very vast, we will try to brief about important indicators to use. If you need any extra free support/guidance then drop an e-mail to support@daytradingshares.com You can use following indicators for entry and exit signal, over bought and over sold levels etc. MACD RSI Moving Averages For more guidance about these indicators please use mention link http://daytradingshares.com/charting_charts_technical_analysis.html

Returns on investment in Indian companies

There are very important benefits of Delivery based trading Hold as long as you want If you buy shares and if it goes down, then you can hold them and sell them only when your shares go above your buy price. Loan Nowadays some banks and some financial firms provide loans on your shares. So you can utilize your shares in your bad times. Dividend (very important) If companies make good profit, then they may declare dividend per share. If you hold shares of such companies then you may get dividend per share. Good returns Nowadays if you keep your money in banks then you get maximum 9% or 9.5% per year. If you invest in shares of good growing companies then you can earn minimum 15% returns per year. Some companies give 30 to 40% returns per year. Best share market returns are based on delivery based trading for long term. Bonus share If company makes extra ordinary profit then company may declare bonus shares. Bonus share like 1:1 means if you have one share then you may get another free. So if you have delivery of such shares then you are liable for such bonus shares.

Money making opportunities for long term

It become very important to decide for delivery based trading that how long to hold shares of a company-----right? Please watch on following two important points, Watch Q1, Q2, Q3, Q4 results of a company and check whether company is declaring/posting consistent profit or sales, its very important for a company to declare quarterly results in good profit percentage in order to prove its consistent growth in the market.

Declaration of future plans, expansions, acquisitions, mergers etc. Any good such plans can boost companies profit, so you may plan to hold such shares. Such plans are very important.

Financial planning for your share returns

Its another important point to consider, if you hold more than one share then it is always advisable to prepare technical document for all your shares. You can prepare excel or word sheet on your computer or you can write in your notebook. Points to involve/write with date All quarterly results - Including profits and sales ratio and other financial ratios Declaration of bonus or dividend. Declaration of acquisition, expansions etc Weekly volume, close price, PE ratio, any company news etc. In this manner you will come to knew what is happening about your share and you can decide when to sell or till what period to hold. This system is called portfolio maintaining. Even you can keep a close watch on share which you are planning to buy and if you get proper signal or feel comfortable with its quarterly results or news/future plans, then you can jump and buy that share. If you need free advice then e-mail us at support@daytradingshares.com

Finding growth stocks

Find out stocks with the latest P/E (price to earning) ratio of less than 10. Filter the companies with net sales of less than Rs.100 Crore in latest financial year. To find out real growth stocks, filter out all companies whose 3 years average sales and PAT (profit after tax) figures are less than 15%. Further to get more refined stocks, filter out stocks having debt to equity ratio more than 1.5 and return on capital employed (ROCE) less than 15%. Drop out all stocks having Interest Coverage Ratio of less than four times over the past 3 financial years. This ratio indicates how company is capable to pay its debits. Companies required having strong cash flows in order to make it to list. So taking into consideration this point you can further filter all those companies whose 3 years average net cash flow from operating activities was less than 50% of reported cash profit. After applying these 6 filter parameters you may be arrived at couple of stocks which are under valued in share market, but its fundamental and growth momentum requires very strong. If you need further to filter out these stocks and wish to have one or two stocks then you can Contact us and we will provide you more refined stock.

Share market trading tips

Don't Overtrade First and very important is not to Overtrade - Never put all your money/savings in share market.

Best Investment in different sectors Do not invest your money in single share/company invest in multiple shares/companies and again not in same sector. Invest in different sectors this will save you from big loss if that sector or company goes in down trend. Wait, watch and trade Do not jump in market early. Wait, watch and trade. Make sure and confirm all your strategies like resistance and support levels and then plan to trade/invest in share market. Study tips carefully Do not react to tips given by anyone First observe that stock, check the volume, where they are increasing or decreasing and then decide your trade. Do not buy or sell blindly based on share tips. Always go with Market trend Dont short sell, if the market is going up and dont buy if the market is falling down. Try to minimize your Loss and increase profit Get ready to accept loss if you do wrong trade Come out of your trade if you have entered in wrong time by accepting loss, instead of waiting and running into huge loss. Dont Panic Dont make early trades and even dont square off your trade early Even if you see the scrip has moved up drastically, dont buy, confirm the volumes of buying and selling and then decide your trade. Dont square off /exit from your trade early if you see scrip/share has come down bit from top. If it is coming down from top means it is cooling, if you see more buyer than seller then you should hold your position. You must know which share has what momentum, means if the share price is Rs.120 then you can expect upside from Rs.1 to 5 and not Rs.50 to 100. If the scrip is going up, it will go in ladder fashion, it will go up and it will come down bit and it will again continue its upward journey. Invest in Share market for long term market Share market returns are long term returns. If you planning for short term, then you should keep updated yourself about your stock and share market. Some day traders also do quite well earning on day to day basis. If you dont know proper day trading, then you should not do its big risk and same thing applies for short term trading. Invest in shares having good fundamental background and wait for long term, you will get good returns as compared to any other investment methods. Wait for opportunity If you are not sure about market movement then watch and wait for opportunity, dont trade forcefully. Some times market move in range bound means market move up-down in very small range at that time it becomes very difficult to judge the market direction. Its always better to wait instead of losing money. Dont expect too much - day traders Dont expect too much - Be happy in whatever profit you get, dont try to grab too much from market. Be realistic, and dont expect too much. Online investment advice for high returns

Lack of Knowledge is very risky and very dangerous, so dont do trading or investing without having proper knowledge. Read books, refer websites and get prepared before you plan for share market trading or investing.

Learn Technical analysis charting

TECHNICAL ANALYSIS
This technical analysis will be very useful for those who are new to technical analysis in share market. The following points will explain how to make use of different types of indicators, support level, resistance level etc. If proper technical analysis is done then the investment strategies will improve drastically. This article has all basic terms of technical analysis but this will give you better idea of the share market but if you are interested to know more about technical analysis then drop an email to us at support@daytradingshares.com and we will provide free guidance. The Foundation of technical analysis is the chart.

Charts
Mainly there are 2 types of charts Line Chart and Candlestick Chart Line charts A chart shown below is the Line chart is the simplest type of chart. As shown in the chart the single line represents the stocks closing price on each day. Dates are displayed along the bottom of the chart and prices are displayed on the side(s). Line charts are typically displayed using stocks closing prices. Candlestick charts A candlestick chart displays stocks open high, low, and closing price. These type of charts are the most popular type of all charts. As shown below the top of each vertical bar represents the highest price of the stock and the bottom of the bar represents the lowest price of the stock it reached on that day. A closing price (last price) is displayed on the right side of the bar. The red bar indicates that stock has closed lower then its open price and white bar indicates that the stock has closed above its open price. At the bottom you can see time frame.

Disclaimer: Information presented on this site is a guide only. It may not necessarily be correct and is not intended to be taken as financial advice nor has it been prepared with regard to the individual investment needs and objectives or financial situation of any particular person. Stock quotes are believed to be accurate and correctly dated, but DayTradingShares.com does not warrant or guarantee their accuracy or date. Copyright 2007 DayTradingShares.com All Rights Reserved

Support and Resistance

Support and Resistance prices are very important in stock market and in technical analysis. Support - The support level is considered when the stock is falling down. The support is the level at which the stock price gets support when the stock is falling down, and if the support breaks then that stock may witness further down movement. Resistance - The Resistance is taken into picture when stock price is moving up. The resistance level is the price at which stock price get stoppage and if this stoppage/resistance breaks then further upside is expected in that stock price. Generally, stocks comes to support and resistance points and get constant before further movement and further movement either down side or upside depends on buyers expectation and other technical aspects. The breaking of support and resistance levels can also be triggered by fundamental changes, and that is up to investor expectations (fundamental changes like changes in profits, expansion, takeover, management etc). Supply and demand There is nothing strange about support and resistance levels. It is just supply and demand. The supply is the number of shares that sellers are willing to supply (sell) at a given price. The demand is the number of shares that buyers are willing to buy at a given price. The investor expectations keeps on changing and so do the prices of stocks. A breakout above a resistance level is evidence of an upward move as more buyers (demand) are willing to buy at higher prices. Similarly, the failure of a support level indicates that more supply (seller) is available and ready to sell at lower levels. The Basic foundation of technical analysis tools is in the concept of supply and demand. So Charts provide us the best view and analysis of these levels in action. Traders Regret (unhappy) Level After the break out of a support/resistance level, it is common for stock traders to think on the new price levels, whether this price is suitable or not which results in further upward or downward movement. So in other words we can call this as traders regret. So due to this the price may come back to support/resistance level. In such scenarios one of the two things can happen. Either the stock prices will move back to their previous level OR investors/traders will accept the new price and the stock price will keep moving up in the direction of breakout How to understand what is going to happen and when? A breakout generally happens with the support of huge volumes. If the price breaks through the support/resistance level with a large increase in volume and the traders regret period is on relatively low volume then this indicates that the new price up lift will keep ongoing. Conversely, if the breakout is on moderate volume and the traders regret period is on increased volume then this indicates that very few investor expectations have changed and hence return to the original price. Changes in price are the result of changes in investor expectations of the stocks future price.

Trends
In the earlier chapter, we saw how support and resistance levels can be penetrated by a change in investor expectations which results in shifts of the supply/demand and hence change in stock price. This type of a change is always based on News. In this TRENDS section, we will see what is trend and how it influences stock prices.

A trend represents a consistent change in prices. A trend is different from support/resistance levels. Trends represent change, whereas support/resistance levels represent barriers to change. Upper Trend = A rising trend is defined as stock prices keep touching higher prices. A rising trend can be thought of as a rising support level and the bulls are in controls which are pushing the stock prices higher and higher. Falling trend = It is defined as stock prices keep touching lower prices. A falling trend can be thought of as a falling resistance level and bears are in controls which are pushing the stock prices lower and lower. The break out takes place when investors expectations change in support with increase in volumes. As in support/resistance, in trend lines also Volumes plays a major role in continuing the trend or in break out of the trend.

Moving Averages
Moving averages are one of the oldest and most popular technical analysis tool. This section describes the basic of moving average and interpretation. Nowadays you get moving averages readily available on most of the websites. To brief you moving average is calculated by adding the closing prices of a stock for most recent 15 days and then dividing by 15 the result what you get is the 15 day moving average. How to trade on moving average Suppose If the stock price is above its 25 day moving average, it means that investor's current expectations (the current price of the stock) are higher than their average expectations over the last 25 days, and that investors are becoming increasingly bullish on this stock and result is that the stock price may go up. Conversely, if today's price is below then its 25 day moving average, it shows that current expectations are below average expectations over the last 25 days and this may bring stock price lower. The moving average is used to observe changes in prices. Investors typically buy when a stock price rises above its moving average and sell when the price falls below its moving average.

Indicators
Indicators are used to predict or analyze future changes in stock price. There are hundreds of indicators but in this section we will discussed the indicators which are most widely used and important ones. MACD This is one of the widely used indicator. MACD stands for Moving Average Convergence Divergence. This indicator is based on moving averages Nowadays MACD is readily available on any web sites. No need to sit and calculate. But just to understand let us brief about it. The MACD is calculated by subtracting a 26-day moving average (long term) of a security's price from a 12-day moving average (short term) of its price. The result is that MACD is an indicator that goes above and below zero. How to trade on MACD indicator? Have a look on following chart of MACD Red line is short term moving average and blue line is long term moving average. When the short term moving average crosses above the long term moving average (as shown in following chart) in the upward direction, it means investor expectations are becoming bullish and there may be

rise in stock price. As it is shown in following chart with green lines how price increases. When the short term moving average crosses below the long term moving average (as shown in following chart) in the downward direction, it means investor expectations are becoming bearish and there may be decrease in stock price. As it shown in following chart with red lines lines how orice decreases. Relative Strength Index (RSI) The RSI is another one of the most used and well-known leading momentum indicators in technical analysis. The main use of RSI is used to find whether the stock is overbought or oversold. The RSI indicator is plotted in a range of between 0 and 100. If RSI is reached above 70 then it is considered that stock is overbought and if it reaches below 30 then it is considered that the stock is oversold. The bullish signal How to trade on RSI Indicator Basically the RSI is a price-following indicator used to look for a divergence in which the stock is making a new high, but the RSI is failing to exceed its previous high. This divergence is an indication of an impending reversal. When the RSI then turns down and starts falling. To put more light, have a look on following chart. If you need more guidance on technical analysis, please Contact us

Simple steps of Mutual Funds

How to Invest in Mutual Funds

Mutual Fund Mutual fund is the way to invest your money in stock market, bonds, Government securities etc. Every mutual fund has one fund manager who looks after your money and invests in appropriate sectors fields etc. No need for you to manage or worry about your money, it will be taken care by mutual funds manager. Mutual fund is calculated in terms of NAV or unit price. NAV It is the total asset value per unit of the fund and it calculated by Mutual Fund Company (also called as Asset Management Company) at the end of every business. In other word NAV is the value/price of a single unit of your mutual fund. For example, if the unit price or NAV of XYZ mutual fund is Rs.10 and if you invest Rs 500 then you will get 50 units of that mutual fund. Charges Generally Mutual fund charges one time fees in terms of entry load and exit load to compensate the expenses occurs for maintaining mutual fund. Entry load - Fees charged while purchasing/subscribing mutual fund. Exit load - Fees charged while exit/selling your mutual fund. The amount of entry and exit charges totally depends on Mutual Fund Company. Even some mutual funds dont charge these loads/charges

Investing types of Mutual Funds

Open ended In this method you can subscribe/buy mutual fund anytime during the year. Anytime you can buy and sell your units. There is no lock in for your money. Closed ended These types of funds are available only during certain period of time, not through out the year like open ended. And if you invest/subscribe for this type of mutual fund then your fund will get locked for that particular period. You can sell or redeem your units only after your lock in period completes. SIP (Systematic Investment Plan) If the mutual fund, have SIP investment method they you can prefer this. In this method you have to invest in equal monthly installment. For example - If you want to invest 12000 per year, then you can plan to invest 1000/month. In this type of investment you get two benefits, one is installment means instead of paying full amount you can pay in installment and second one is if your mutual fund is related to equity market then you may get advantage of purchasing NAV when markets go down.

Mutual Funds Returns

Following are the reasons, why today most of the people choose mutual fund as the best investment method. Your money is managed by professional funds manager Every mutual fund has a fund manager, who will be responsible for your money management, time to time he monitors the performance of your mutual fund and if requires he do changes in the portfolio of mutual fund, so its like invest and forget. But better to keep an eye on quarterly basis not even on monthly basis. Reduced risk Mutual funds invest money in various stocks instead of single stock, if you choose equity link mutual fund. Even if you choose any other mutual fund they will invest in various sectors, fields, Government securities funds etc. So your risk is reduced and you can get higher returns. If you see past records of any top mutual fund, then minimum at least 12% to 15% returns they had declared, which is very good return as compared to any bank returns. Liquidity Investors can buy and sell their mutual fund units any time, especially in open ended mutual funds. Affordability (cheaper to buy) There is no compulsion for amount to invest in mutual fund; you can start investing from Rs.500. Investing in mutual fund becomes easy for every one due to smaller amount. Convenient (easy to buy)

Now days most of the Mutual fund are offering online facilitiy. So you can view an d monitor NAVs, charges, mutual fund plans, redeem units etc. using online facility by sitting at home or at internet caf. Flexibility and variety You have lots of varieties of Mutual fund and brand names. You can choose to invest in any sector you like, any field, any investment pattern you like so investing in mutual fund is very flexible. Tax benefits Very important is you get income tax benefits by investing in tax saving mutual fund and also 100% income tax exemption on all mutual fund dividends.

Best Mutual Fund analysis

After all its your hard earned money, so think twice and consider following points before selecting your mutual fund, Profile of mutual fund Understand where the mutual fund is going to invest your money. Its very important to know the investment sectors and fields where mutual fund is going to put your money. Dont put all money in single mutual fund Dont ever try to put invest all your money in single mutual fund and also in mutual fun d which are sector specific. Because if something gives wrong with that fund then all your money will be in trouble and also if something happen to that sector then also your money is in trouble. So invest/put your money in such mutual fund, who is investing in diversified sectors/fields/shares etc. You can also plan like one mutual fund of diversified equity plan, second mutual fund of balanced type and third one you can plan of debt type etc. In this manner your money will get diversified, risk is reduced and you may get excellent profit. Find the right fund - Look for past returns, dividend etc. the mutual fund has declared. - Look for brand name of mutual funds like Franklin Templeton, HDFC, Reliance etc. to see more click here so that your money will be on safer side. - See how big is the mutual fund like market capitalization, turnover etc. Good if the mutual fund has large market capitalization. - If you have chosen equity or stock market related mutual fund, then you may go for SIP (Systematic Investment Plan) method. - Customer services (Its one of the important point) - The mutual fund company should be easily contacted i.e. you should be able to easily contact the mutual fund company or its executive, how quickly they respond to your questions or your fund related problems etc.

Compare Mutual Funds

Diversified equity mutual funds In this mutual fund type the money is invested in various selected shares of the stock market. It reduced the risk of investing in single stock. Index mutual funds This type of mutual fund gets invested in indices or index like sensex, nifty etc. This type of mutual fund has high risk and high returns. Mid cap funds All investment is done in various selected shares of medium scale industries. According to mutual fund mid cap stocks have faster growth rate. Sector funds In this mutual fund, money is invested in selected shares of specific sectors like auto, IT, pharmaceutical, FMGC etc. Investment in this type of mutual fund is avoided as your money is invested in only specific sector. Tax saving mutual funds Here your money may be invested in equity market, bonds etc. You get income tax benefit by investing in their type of mutual fund.

Top companies mutual fund schemes

You may select following top mutual fund companies which are having good market capital and name. ABN Ambro Birla mutual fund Fidelity Mutual Fund Franklin Templeton Mutual Fund HDFC ICICI JP Morgan SBI Sundaram UTI Reliance Following is the summarization to brief you about the risk involved and returns you may get by investing in particular type of mutual funds.
Risk Involved and Mutual Fund Returns Expected Investments Type of Mutual funds Benefits you get from Mutual fund

Low

Only in Debt

Bank/ Company FD, Debt based Funds Mix of shares and Fixed Deposits, Balanced Funds, Some Diversified Equity Funds and some debt Funds Capital Market, Equity Funds (Diversified as well as Sector)

Liquidity, Better Post-Tax returns Liquidity, Better Post-Tax returns, Better Management, Diversification Diversification, Expertise in stock picking, Liquidity, Tax free dividends

Medium

Partly in Debt Partly in Equity

High

Only in Equity

Indian Stock market: The basics

I am writing this post because two of my friends wanted me to. I will be just dealing with the Secondary market in general and the BSE or SENSEX in particular. The Financial market in India is broadly divided into 1) Money market- for short term money 2) Capital market- for long term money Money market consists of the Treasury bills, the call money market etc. I wont be going more into it. Coming to the capital market, its further classified into 1) Primary market 2) Secondary market The primary market deals with the Initial public offerings (IPO) or sales of shares by companies to the public for the first time. The recent IPOs that took place in BSE can be viewed here. Once the IPOs are completed all further transactions of the sold shares take place in the secondary market, more commonly known as stock markets or as bourses (jargon in finance). The major stock exchanges in India are the BSE and the NSE. The National Stock Exchange or NSE was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country. The NSEs index is known as S&P CNX Nifty which is a 50 stock index which covers almost 25 sectors of the economy. Bombay Stock Exchange Limited is the oldest stock exchange in Asia. The Exchange has a

nation-wide reach with a presence in 417 cities and towns of India. The BSEs index is the SENSEX which is a 30 stock index. The SENSEX is an acronym for Sensitive index of the BSE. Current scenario The price of shares/scrips is fixed in the market by the invisible forces of demand and supply. When the purchase price is more than the selling price, the prices of share rise i.e. if A wants to sell a TCS share at Rs 40 but B is willing to buy the share at Rs 45, then automatically the transaction is carried out by the computer, and the price of the share increases. The regulator of the Indian capital market is the Securities and exchange board of India (SEBI). It makes sure that the small investors are not cheated and ensures transparency of the transactions. Recently, our markets witnessed a drastic fall, owing to the pull out of the foreign institutional investors (FII). The recent Mumbai blasts have also affected it. My views The investors in these markets form consortiums among themselves such that, a group of these investors are able to make changes in the overall market indices. FIIs are one such group. When they think, the time has come to book profits; they take up a selling position. This causes the market to fall and when the market falls, these groups again buy the shares; thus making profits again out of their buying back the shares. This phenomenon is possible only if the groups transactions can exercise a considerable influence in the concerned market. Market sentiments play an increasingly important role in the fixing of share prices. News such as decrease in interest rates, good rainfall, etc promotes investment thereby raising the price of the indices in the process. But bad news such as a bomb blast or an earthquake quake the investors see, thereby lowering the indices. The reasons for the markets showing a buoyant face during good news in understood clearly. A reduction in interest rates, promotes cheaper borrowing, thus facilitating more investment. While a good rainfall increases agricultural production, which has an impact on the various industries which make use of agricultural inputs. But, during a bomb blast, what I believe happens is that, investors (very much attached to their money) tend to sell. Game theory helps in explaining how the investors react. The typical example of game theory is that of the prisoners dilemma. When an investor hears a bad news, he thinks that other investors will pull out their investment owing to increased need of contingency funds.

When all the investors think alike, a large scale selling occurs. I classify it as a typical group phenomenon, arising out of an individualistic tendency. Some related information There are other financial instruments in the market known as the Mutual Fund (MF). They are specialised institutional investors who mobilise funds from the public and invest in the capital markets. The people consider investing in such MFs less risk than shares. It is a booming market but has not utilised its full potential. MFs are a good option for those investors who do not have time to make a detailed analysis about the economics of the capital market. Recently investment gurus have been stressing the importance of commodity markets. They are gaining importance in the Indian market. Some economists and finance analysts believe that when an industry is overvalued, a correction takes place. Say, if the asset prices are increasing but the intrinsic value has remained almost the same, then a bubble is said to occur, which is sure to burst in the near future. Likewise, some believe that the Indian markets were overvalued and the recent crash which occurred was just a correction.

Indicator? In the previous months, we might all have come across the headline that Indian economy is booming with the stock market touching its record peak of 12,000. The market indices are just indicators of the investors confidence levels and the business enthusiasm levels. We should not view the markets in isolation and say that the economy is doing well. Jargons used Bear- a selling spree where the prices are falling Bull-a buying trend with rising prices short & long position-you can view it here Bourses-stock market Hope this post has been of use to my friends and others. If you have liked it, please do let me know in my comments. If you have any questions or clarifications, do let me know.
This is in continuation of my last article on derivatives.

An option is nothing but a "Right Given to the Holder of the Option". It may be a "Right to Sell" Or "Right to Buy". The right to sell option is called a put option and right to buy option is called as call option. When a person buys an option note only the right is transferred. It is not necessary that a person should execute the right on maturity date. Then the question arises how a seller can make profit out of it even if it is not executed on the maturity date. The buyer of the option has to necessarily pay a premium called option premium for buying that option. The buyer can buy a put option or a call option. The simple logic is a buyer who expects a price rise will buy a put option for a price determined today and a buyer who expects price fall will buy a call option. Call and put options are there in stocks, commodities etc.The next one is Swap which deals with currency rate exchanges which may not be that significant.

What Are Futures And Options? This article is based on the request of few people who wanted me to throw lights on futures and options. To understand this first we have to understand what derivatives are. Derivatives are instruments whose value depends on value of the underlying asset. What do you mean by the above mentioned statement? Lets take an example of an orange juice. The value of an orange juice depends on the value of the underlying asset orange. Hence orange juice can be termed as a derivative of orange. Like that the value of derivatives that we are going to discuss here will rely on the value of underlying asset. Here the underlying asset can be commodities (wheat, rice, oil seeds etc), metals, currency, stocks.basically derivatives in finance parlance can be classified into four headings. Forward Contracts Futures Contracts Option Contracts Swap Forward contracts It is nothing but an agreement between two parties to buy a product at a future date whose price is determined by the present. Why it happens?

Generally everyone in this world are scared about uncertainties due to inflation, monsoons etc which leads to price raise. So a seller who is scared of price fall in future is ready to compromise on his high profits and agrees to sell his product for an optimal profit to a buyer who is scared about price rise in future. So the buyer agrees to buy the product at a future date at a price determined today with the risk minimizing attitude of if price goes very high I am safe that I can buy with the determined price. If price goes very high the buyer is benefited and if it falls the seller is benefited. This generally happens in agricultural commodities because of unpredictability of monsoons. But as we all know this is a risky transaction for one and other is benefited. So in later days lot of people started to take a backseat when loss comes to them. So people thought about other ways of solving this problem. Here came futures and options. Future contracts This is same as forward contracts but here we have two differences. 1. It takes place with the presence of third party (the exchange) 2. It is just a notional commitment between the parties. What do you mean by notional commitment? The actual seller produces the commodity and gives it to exchange and gets the receipt. The commodity is maintained at the exchange warehouses after quality check. Now the receipt is traded as the commodity is traded and it passes on from people to people who are interested in buying. The exchange takes care of it at the maturity date. Every increase in price is a benefit to the buyer and it will be accounted in his account because that is the value of that commodity that day. Any decrease in price is deducted from his account. This was `further modified and the concept of options came to play which I will explain in next article Share market experts rely on two analysis before selecting a share for investment. One is technical analysis, in which a share's movement of price

and volume is studied over years and they try to strategize the movement. Another is the fundamental analysis in which they study about the company associated with that share, its sector growth etc. However a genuine investor cares more about fundamental analysis of a company because the price of a share can be manipulated to go up or down. if this there on one side ,as I already said nowadays information about company and sector performance reaches all at the same time through media ,fundamental analysis also became a more common feature known to all experts. So sometimes, a common man who is a regular observer of market is able to set good portfolio for himself when compared with experts. In this article I will just take you through certain basics of technical analysis. Candlestick representation of a stock price movement within a day:

A share when traded will be subjected to four price levels: 1. Opening Price: The price at which the first trade is done or the market opens 2. Closing Price: The price at which last trade is done or When the market closes. 3. Intra-Day High: The maximum price the share was traded for the day. 4. Intra-Day Low: The minimum price the share was traded for the day.

This is simple ideal graph by which I am trying to explain you all the simplest way of predicting and investing. The share price is plotted for various days in a graph as shown above. Using statistical tools the trend line is derived. It will be observed that prices follow a particular pattern. Assume that you are close to level 4 of the graph. Since you know the price is going to rise after that you can buy the stock. The bottom vertical projections from x axis indicate the volume of trade, usually at these points volume will be more because of buying. Similarly it is the reverse when you are point 3.this is the simplest way of understanding and in further articles I will take you to depth.

PRABHU.S KIAMS 09845967823

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