Stock market Trading
Generally Speaking trading is the transfer of products and services between two parties. It is the fundamental idea that underpins all financial systems and financial activity. An unorganised market lacks stringent guidelines and restrictions, and even if it does, compliance is not required however, a organized market is has strict guidelines and rules.
In terms of a stock market, stocks are the commodities which are traded and has an organised market that is made up of a set of rules and regulations that every company must adhere to. These companies function under the umbrella of the stock market.
The stock market trade drives the wheels of growth in any economy and contributes much in the movement of gross income of the nation.
Types of Trading in Stock Market
There are different type of trading in the Stock Market, which are:
This type of transaction involves trading in securities on a given day, and is for that particular day only. People engaged in day trade buy shares for just few minutes or hours and benefit from the variations of price throughout that particular day.
A trader engaging in such a trade must complete his or her operations before the market closes for the day. Day trading necessitates market knowledge, a complete awareness of market volatility, and a sharp feel of the ups and downs in stock prices. As a result, it is generally carried out by savvy traders or brokers.
Suited for experienced traders, who wishes to earn a small amount of interest on a short duration. The trade happens in a single trading session and involves Futures and Options trading. An initial margin of the traded value need to be paid for the trade, this value of margin is regulated by SEBI.
Also known as position trading delivery trading facilitates a long term holding of a particular share. This type of trading benefits both seasoned and beginner traders. The trader may hold the stocks for long time or book profit in short time and is completely upon their judgement of the market. Ideally stocks with major expected price variations or identified potential are booked for delivery trading.
Buy Today Sell Tomorrow
The nature of Buy Today Sell Tomorrow trading depends on the fact that the bought stocks are sold off before the traders get the delivery of it. It is different from a delivery trading as for a delivery the stocks need to be credited to the Demat account related to that trade and BTST does not receive the delivery of the stock. In BTST trading you trade the stock without actually having it in your account whereas in delivery you cannot trade the stock until it is delivered.
Sell Today Buy Tomorrow
In derivative market the traders can sell the stock in a short sell and squares off the position by buying the same in the consecutive day. This trade expects the market to be bearish to earn profit from it. It mostly suits experienced players as opposed to beginners as it needs to much knowledge about the market movement.
Short Sell trading depends on trend of the market movement, a bearish market provides the means to earn profit from it. The trader may sell a stock without holding it getting a delivery and can buy them before the trading hours are closed for the day. This suits an experienced trader one who can predict the movement of the market and book profit from a falling price. The only condition is to square off before the market closes for the day.
Each trading type requires the trader to have a certain skillset and to develop a knack for a particular style. Tolerance for volatility is also one of the requisite quality a trader must possess.