Hello Buddies,
I hope you have enjoyed the part 1.
Let start the step 2 with our research word which we took as a home work "Short Selling"
Research word : Short Selling.
Key for research word: Selling the share which you haven't bought.
Short Selling
We all know that we can buy shares and sell it later for the higher price, so we will get money in our pocket. Have we ever think of selling the shares first and buying it later? Will be able to do that in reality?
Absolutely Yes, we can sell any shares even if we don't have any in our account in technical we call it as "Short Selling".
Let us see a example and where we can apply it:
There is a share of company which is trading at 100 rs, you identified that the price of this company will go down from here in this case we can use Short Selling to make a profit.
--> Sell 100 shares at 100 rs
--> If the price went down 2 rs and share is trading at 98 rs, now you can buy.
--> System will consider as you bought it for 98 rs and sold it 100 rs so we will pocket a profit of 200 rs here.
There are several other complications involved this, we will see that later.
I got a question from a friend, I can understand all your terms and I was trying to perform a trade during my evening time but prices are not changing. Yeah, here comes the important point to note, now we know how to perform buy & sell, where to do but one should know when to do. We should know what are the types of market available and its timings.
Types of Markets and Timings:
1. Equity Market
2. Commodity Market
3. Currency Market
1. Equity Market:
Place where we can buy and sell the shares of company listed in Indian Market. Plain difference between Equity vs other market is, in Equity you can hold shares for unlimited time but other markets run based on the contract it expire after particular time.
Equity Market works in there part
1. Pre-Market Session (9:00 AM to 9:15 AM)
2. Market Session (9:15 AM to 3:30 PM)
3. Post Market Session (3:30 PM to 3:45 PM)
We can trade only during market session timings. Pre & Post Market sessions are mostly used for adjustments.
2. Commodity Market
The commodity is not traded like physical holdings. As we saw, it traded based on the contract and they have expiry date. We can't hold it for a lifetime. It is otherwise called as "MCX (Multi Commodity Exchange)"
We can trade in commodity market from 9:00 AM to 11:00 PM.
3. Currency Market
Currency Market is a place where we can buy or sell, the contract of other country currencies. Even here trades are depend on contract which expire on particular time.
Timing: 9:00 Am to 5:00 PM
We will take bit deeper in equity market and different types of trades that we can take.
Type of Trades:
1. Positional:
If we wanted to buy a share from a company and hold it for unlimited time or even we can hold it for life time this type is called positional trade.
Example: I have heard people holding a share from one of the FMCG company with the average price below 10 and now it is trading around 200. From this we can understand the power of Positional trade.
Note: Warren Buffet believe more on this positional trade.
2. Swing:
We know all business will not be in peak time always, for this scenario we can opt for swing trades. In this type of trade, we should understand how a particular sector will work and select our picks with specific target for short term. When we say short term this can be different from person to person from days to weeks or months.
Example: During the current pandemic, we noticed a huge ramp down in share prices, if we would have opted for Health care sector for this swing trade we will be in profit now. If you have a doubt, I recommend you to have a look at "Health Care" sector stocks.
3. Intra-day
As a name suggest, we are going to buy & sell or sell & buy a particular stock with in a day of time. Sometimes based on news the price of the stock may fall, if we know the price fall, we can go for sell & buy option and buy & sell combo if we predict price may go up.
Example: There was news around Reliance that FB invested in them and price of Reliance shares hiked in day. In this scenario we can opt for this intra-day trade.
Note: If you have bought or sold any shares under intraday category, make sure that we are covering it before the auto-square off time.
Covering - If we bought or sold any shares we should sell or buy them with in a day, if we didn't do so then auto square off will come in to picture.
As we have come to the conclusion, it is time to share a home work or research topic for us.
I hope you have enjoyed the part 1.
Let start the step 2 with our research word which we took as a home work "Short Selling"
Research word : Short Selling.
Key for research word: Selling the share which you haven't bought.
Short Selling
We all know that we can buy shares and sell it later for the higher price, so we will get money in our pocket. Have we ever think of selling the shares first and buying it later? Will be able to do that in reality?
Absolutely Yes, we can sell any shares even if we don't have any in our account in technical we call it as "Short Selling".
Let us see a example and where we can apply it:
There is a share of company which is trading at 100 rs, you identified that the price of this company will go down from here in this case we can use Short Selling to make a profit.
--> Sell 100 shares at 100 rs
--> If the price went down 2 rs and share is trading at 98 rs, now you can buy.
--> System will consider as you bought it for 98 rs and sold it 100 rs so we will pocket a profit of 200 rs here.
There are several other complications involved this, we will see that later.
I got a question from a friend, I can understand all your terms and I was trying to perform a trade during my evening time but prices are not changing. Yeah, here comes the important point to note, now we know how to perform buy & sell, where to do but one should know when to do. We should know what are the types of market available and its timings.
Types of Markets and Timings:
1. Equity Market
2. Commodity Market
3. Currency Market
1. Equity Market:
Place where we can buy and sell the shares of company listed in Indian Market. Plain difference between Equity vs other market is, in Equity you can hold shares for unlimited time but other markets run based on the contract it expire after particular time.
Equity Market works in there part
1. Pre-Market Session (9:00 AM to 9:15 AM)
2. Market Session (9:15 AM to 3:30 PM)
3. Post Market Session (3:30 PM to 3:45 PM)
We can trade only during market session timings. Pre & Post Market sessions are mostly used for adjustments.
2. Commodity Market
The commodity is not traded like physical holdings. As we saw, it traded based on the contract and they have expiry date. We can't hold it for a lifetime. It is otherwise called as "MCX (Multi Commodity Exchange)"
We can trade in commodity market from 9:00 AM to 11:00 PM.
3. Currency Market
Currency Market is a place where we can buy or sell, the contract of other country currencies. Even here trades are depend on contract which expire on particular time.
Timing: 9:00 Am to 5:00 PM
We will take bit deeper in equity market and different types of trades that we can take.
Type of Trades:
1. Positional:
If we wanted to buy a share from a company and hold it for unlimited time or even we can hold it for life time this type is called positional trade.
Example: I have heard people holding a share from one of the FMCG company with the average price below 10 and now it is trading around 200. From this we can understand the power of Positional trade.
Note: Warren Buffet believe more on this positional trade.
2. Swing:
We know all business will not be in peak time always, for this scenario we can opt for swing trades. In this type of trade, we should understand how a particular sector will work and select our picks with specific target for short term. When we say short term this can be different from person to person from days to weeks or months.
Example: During the current pandemic, we noticed a huge ramp down in share prices, if we would have opted for Health care sector for this swing trade we will be in profit now. If you have a doubt, I recommend you to have a look at "Health Care" sector stocks.
3. Intra-day
As a name suggest, we are going to buy & sell or sell & buy a particular stock with in a day of time. Sometimes based on news the price of the stock may fall, if we know the price fall, we can go for sell & buy option and buy & sell combo if we predict price may go up.
Example: There was news around Reliance that FB invested in them and price of Reliance shares hiked in day. In this scenario we can opt for this intra-day trade.
Note: If you have bought or sold any shares under intraday category, make sure that we are covering it before the auto-square off time.
Covering - If we bought or sold any shares we should sell or buy them with in a day, if we didn't do so then auto square off will come in to picture.
As we have come to the conclusion, it is time to share a home work or research topic for us.
Research word : Auto Square off.
Fast Forward: We will get bit deeper in to the Equity market.
Interested People can follow this Telegram channel: https://t.me/NiftyChamps
Guys, it is a process of learning. Please feel to add your questions, I will try to answer them at the earliest.
V Divaakar Guptha.
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