Before investing, it is always wise to learn the Basics of Stock Market. 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.
Stock
Stock is an equity investment that represents part ownership in a corporation and entitles you to part of that corporation’s earnings and assets. Common stock gives shareholders voting rights but no guarantee of dividend payments. Preferred stock provides no voting rights but usually guarantees a dividend payment. In the past, shareholders received a paper stock certificate — called a security — verifying the number of shares they owned. Today, share ownership is usually recorded electronically, and the shares are held in street name by your brokerage firm.
Stock market
An institution that facilitates the buying and selling of stocks
A stock market may be a physical place, sometimes known as a stock exchange, where brokers gather to buy and sell stocks and other securities.The term is also used more broadly to include electronic trading that takes place over computer and telephone lines. In fact, in many markets around the world, all stock trading is handled electronically.
What is share?
A share is simply a divided-up unit of the value of a company. If a company is worth £100 million, and there are 50 million shares in issue, then each share is worth £2. As the overall value of the company fluctuates so does the share price.
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.
Quick view 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.
Investments in stocks can generate returns through dividends, bonus share, right issue and capital appreciation of share value.
The 3 basic requirements needed for trading :
· D-MAT Account
· Trading Account
· Bank Account
D-MAT Account----
D-MAT account, short term for dematerialised account is a type of banking account which dematerialize the paper-based physical shares.The idea of dematerialised account is to avoid the need to hold physical shares--the shares are virtually being bought and sold through the demat account and save the fraudlent factor.
Trading Account----
An account similar to a traditional bank account, holding cash and securities, and is administered by an investment dealer. An account held at a financial institution and administered by an investment dealer that the account holder uses to employ a trading strategy rather than a buy-and-hold investment strategy.
Bank Account----
A Bank account is required for carrying out various financial transactions associated with trading of shares. This is where the money on sale of shares will be credited or money for buying shares will be debited from. A normal Savings Account is enough and nothing additional needs to be done with the Bank account.
Once the D-MAT account, Trading account and Bank account are in place, an individual is ready to start trading.
To trade successfully requires a well-defined plan
1. Learn the basics --------- Education
2. Determine a strategy -------- Back-testing, Stock Screens, Charts, Java Charts
3. Identify opportunity --------- Stock Screens, Charts, Java Charts
4. Track stocks ----------- Watch List, Charts, Java Charts
5. Set alerts ---------- Trade Alert
6. Initiate trades
7. Monitor positions -------- Risk Keeper, Charts, Java Charts
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