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A Journey into Stock Markets

What is Stock? How trading happens? How to trade in stocks? Kinds of Trades Basic Terms and terminologies Technical indicators Strategies Futures and options
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Its a means to own a company. It is a kind of security. (The definition of Securities as per the Securities Contracts Regulation Act (SCRA), 1956, includes instruments such as shares, bonds, scrips, stocks or other marketable securities of similar nature in or of any incorporate company or body corporate, government securities, derivatives of securities, units of collective investment scheme, interest and rights in securities, security receipt or any other instruments so declared by the Central Government.)
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We need to have DP(DEPOSITORY PARTICIPANT) account. We need to have a Trading account.


And of course money

People using terminal provided by their brokers

Stock Exchange Ex : NSE,BSE

Ones which are listed in that exchange. IPO. Secondary market

Intra-day Trading Delivery based Trading

Buying and Selling on the same day

Brokerage will be different for intra-day and delivery based trading, intra-day being lesser

Buying and Selling are on different days Brokerage will be higher than intra-day Their will be minimum delivery charges

Ex : You buy the share on Monday. It will be delivered to you on Wednesdays settlement period (T + 2) normally.

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Selling something which you dont have. Ex: Lets consider a company RIL. Its priced at Rs 2,500/- before opening. You know its going to fall that day because of some reason. But you dont have any shares with you of RIL. But still you can sell the shares, this is called as short selling.

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Contd Assume you sold 10 RIL shares in morning at Rs 2,500/-. By evening as you had thought, it had Fallen down to Rs 2,400/-. Now you buy back Those 10 shares what you had sold. So the difference in amount, 2,500 2,400 = 100 100 * 10 = 1000, is yours. This process of buying back is called short covering.

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Fundamental Analysis

Technical Analysis

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Analyzing a stock based on the fundaments of the country, the sector, and the company individually.

It includes going through balance sheet and profit-loss statement of the individual company and checking various ratios.

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EPS :

PAT Dividend/ No of shares

PE :

Present share Price / EPS

P/BV

Present share price / Book value

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Example : Enron, Satyam IT industry off recent

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Forecasting the future direction of prices through the study of past market data, primarily price and volume. In its purest form, technical analysis considers only the actual price and volume behavior of the market or instrument.

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Support : Where one buys

Resistance : Where one sells

Some Examples
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What is NIFTY, SENSEX?

How are they Calculated?

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Execute couple of paper trades before you actually execute the real trade, we have many simulators and games available now Always follow strict entry and exit points Always execute a limit order Never buy and sell for full amount in one go, Spread it across a range, it will give much better bottoms and tops Never average a losing trade
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HAPPY TRADING

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