Information and guide on Online Share trading

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 you’re 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 can’t 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.

Fundamental and Technical analysis in Indian Share Market

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.

Terms in share market

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 -
Buying 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.

Stop Loss Orders - Stop loss orders ("stops") are limits set by traders at which they will automatically enter or exit

trades - an order to buy or sell is placed in the market if price reaches a specified limit.