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Raymond Said:Learning about the Stock market, trading,stock, etc....?
We Answered:It is very interesting to invest in shares, though most of the people would like to start with small money.
First of all, you need to know a little bit in detail about the stock market, then about the shares and the mode of their trading. What are the risks involved and how to be smart in dealing with shares?
Stock Market – It is the place where the shares of listed companies are bought and sold. In India, you have BSE and NSE as two big stock exchanges.
Shares are bought and sold by you and me only through approved brokers.
Approved brokers are mostly banks like the ICICI, HDFC, IDBI, UTI Bank, SHCI, are to name a few.
First you need to open an account with a bank, that has the Demat account facility.
Go to the respective bank and open a Savings account with deposit of around Rs. 10,000.
Tell the bank that you want to deal in shares and ask them to open a Demat account. It will be done automatically after signing a few forms.
A Demat account is nothing, but the account where the shares bought by you will be kept separately.
Only you could operate that account online, through Internet.
You could open the online facility offered by the ICICI, HDFC or ShareKhan or others and buy shares you wish and decide the quantity and the price.
Here the bank will act as a broker. You online order for purchase would be carried out by the bank. They charge broker commission, much less compared to private brokers.
It is very important for you to have enough balance to your credit in your savings account.
As and when you buy on line, your Demat account will be credited with those shares. The money for the purchase will be automatically deducted from your account by the bank.
You also have to keep looking for opportunities to sell the shares that you have already bought and kept in your Demat account.
For buying and selling, it is necessary to familiarize which shares to be bought at what prices and sell them at what price.
As and when you decide to sell (depending on the price quoted in the market) you could sell them through online trading system.
The moment you sell your Demat account will be debited with the number of shares sold by you.
Your account will be credited with the amount for which you have sold.
Depending on the amount of profit earned, tax will also be deducted by the bank (TDS). The bank will give you a TDS certificate by the year end, i.e., March 31, of that year which you could attach with the return to justify the tax payment.
When the shares could be bought or sold?
Always sell the shares when the price is up and buy when the price is down. Every body had to adapt to this formula.
What profit should it give you?
You buy a share for a particular price. Take the amount as investment. Any bank will lend you at ten per cent interest. It will give you 24 per cent return if the share price rises in such a way. Do not wait for the market to crash and start searching for buyers for the price you quote.
After selling, never look back and repent for what profit you have earned, had you delayed the sale. Be happy that it did not happen otherwise. This is the best way, to sell.
If you want to buy, look for 52 week low, look for the peer companies, their price and compare it with the company you want to buy.
Look for the prospectus, future plans and the profit the company ought to make in the next year. Take the perception or a change and buy.
You cannot take profit in the buys. Losses do occur as long as you are at decent surplus for which you have no reason to be unhappy.
Hope this helpfull !!!!!!!!!!!!!!!!!
Rene Said:Stock Market Question please see details?
We Answered:This is a good one. First of all let’s define a “market order”. A market order is an order to buy or sell a security immediately at the best available market price. Market orders take top priority on an exchange. The two markets are distinctly differentiated in the sense that the NYSE is a physical exchange with a floor vs. the NASDAQ which is a purely electronic market place (i.e. the buyers and sellers are in cyberspace).
The difference in the execution differs slightly for each exchange. Specialists working on the NYSE have four roles to fulfill in order to ensure a fair and orderly market:
Auctioneer - because the NYSE is an auction market, bids and asks are competitively forwarded by investors. These bids and asks must be posted for the entire market to see to make certain that the best price is always maintained. It is the job of the specialist to ensure that all bids and asks are reported in an accurate and timely manner, that all marketable trades are executed and that order is maintained on the floor. Along with posting the daily bid and ask prices, the specialist must also set the opening price for the stock every morning. This price can greatly differ from the previous day's closing price based on after-hours news and events. The role of the specialist is to find the correct market price based on supply and demand.
Agent - the specialist can also accept limit orders relayed by investors through brokers or electronic trading. It is the responsibility of the specialist to ensure the order is transacted appropriately on behalf of others, using the same fiduciary care as the brokers themselves once the price of the stock has reached the limit criteria.
Catalyst - as the specialists are in direct contact with the bidders and sellers of particular securities, it is their responsibility that enough interest exists for a particular stock. This is carried out by specialists seeking out recently active investors in cases where the bids and asks can't be matched. This aspect of the specialist's job helps to induce trades that may not of happened if the specialist had not been there to bring buyers and sellers together.
Principal - in the instance where there's a demand-supply imbalance of a particular security, the market maker must make adjustments by purchasing and selling out of his/her own inventory to equalize the market. If the market is in a buying frenzy the specialist will provide shares from their inventory until the price is stabilized. They'll also buy shares for their inventory in the event of a large selloff.
On the NASDAQ, market makers are actually not at the exchange. They are large investment companies which buy and sell securities through an electronic network. These market makers maintain inventories and buy and sell stocks from their inventories to individual customers and other dealers.
Each market maker on the NASDAQ is required to give a two-sided quote, meaning they must state a firm bid price and a firm ask price that they are willing to honor.
Each security on the NASDAQ generally has more than one market maker, with an average of 14 market makers for each stock which provides liquidity and efficient trading. The market makers are openly competitive amongst themselves and facilitate competitive prices; as a result, individual investors generally will get the best price. As this competition is evident in the limited spreads between posted bids and asks, the market makers on the NASDAQ will in some instances act very much like the specialists on the NYSE.
As far as how these markets are becoming more similar has a great deal with implementation of information technology. With the proliferation of the internet, the entire world now has access directly to these two markets in virtually real time. This has literally globalized the world’s market places. From a professional trader’s perspective, I know that the NYSE specialists are coming under greater scrutiny on how they execute orders. I have heard that some have criticized the specialists for inter positioning themselves between the buyers and sellers. FINRA/NASD prohibits this practice. Imagine how much more efficient a purely electronic marketplace is the pure sense of latency. I have heard many professionals speculating that one day the NYSE may also become a purely electronic market place. We’ve come a long way since it’s inception in 1792, when 24 New York City stockbrokers and merchants signed the Buttonwood Agreement.
Hope this helped.