Trading in the Stock Market

Trading in the Stock Market Trading in the stock market involves risk, but if you know what you are doing you stand the chance of making a lot of money.

If you have not thought before of what trading is then the best analogy to consider is that trading is a bit like operating a small business. You have to commit your money to a particular opportunity when you start a business and you use your knowledge and skills in assessing the chance that a chosen business opportunity will prove profitable.

A business will possibly fail and many do, but the research you do in advance should make you confident that you will make money. Sometimes you will lose money, but if you are good you will make more profit than losses. Trading is in this way just like planning to start a business, and if you are wise it will be your knowledge and research that will improve the odds for you over the next man.

To be a successful trader running a day trading system, you need to work to understand the market in your area of expertise. Don't be fooled into thinking that being a trader is easy and that money will fall into your bank account. Just like anything else you need to develop your own market appreciation as a skill and apply that skill to make money.

Traders can and do make money on in an up or down market, and the best of them use their own technically based analysis as well applying fundamental principles of the stock market to make their profits. Traders of stocks have many and varied approaches to how they invest in the market. Some buyers love the gambling aspect and like to take large gambles when they invest.

They choose the most risky stocks and have to accept substantial losses as well as enjoying the equally high gains. Others prefer to look for safer opportunities. Both approaches are equally acceptable under certain circumstances, and it is, of course, the long term profitability over many trades that matters. Investors are slightly different from traders, and investors put their money into stocks over a longer period and they also get dividend as a reward for investing at the end of every financial year. Sometimes companies also offer premium shares to longer term investors as existing share holders, as a bonus. However, although this is not seen as risky as short term trading in the stock market, investing can also be a dangerous, yet profitable endeavor.

Many people have been burnt and decide not to ever invest or trade again, while others thrive and prosper. The main thing to realize before anyone starts trading is that although it may appear easy, there is a lot of knowledge and skill in profitable trading. So, don't make the mistake of thinking that you can just expect to make money without first developing knowledge and experience, or accessing the knowledge of others within a stock trading system that you trust.

How To Invest In Stocks

You cannot trade or invest in stocks unless you open an account with a stock broker. Since investing in stocks has been much facilitated by the advent of computers and internet, you can easily register your account online with any stock brokerage firm.
Before you open an account, you must find out the minimum amount you have to deposit with your broker irrespective of the type of account you opt for from the website of your brokerage firm. Each broker has his own minimum account limit, which may range from $500 to $10,000.

The guiding principle before accepting the minimum amount deposit should be your budget and also the facilities and services that the brokerage offers for a particular level of minimum amount deposit. A comparison-shopping in this respect would prove highly beneficial in long term trading. While it may be true that the less minimum deposit you pay, the less you get in form of services as well, there are some brokerage firms that deliver much more value than the minimum deposit they demand.

A good brokerage firm may demand a minimum deposit for example $ 2,500 but may deliver much more value in terms of lower commissions, as low as $1.50 to $ 3.00 per equity trade, free dividend reinvestment plans and a large number of free trades spread over a long time. They may not even charge you any thing if your account becomes inactive for some time. If you are beginner in stock investing, these benefits can prove to be of immense value in form of risk free investments and savings.

The next step is to choose an account. You can choose an:

Individual Account
As the name suggests, an individual account is an investment account that is opened for one person. You must have reached the age of majority, i.e., you should be 18 years old or above in your state of residence. The age of majority entitles you to full legal rights as an adult. Besides, you must also be a US citizen or a resident alien with a valid social security number. A resident alien is a person who is a non-US citizen but legally resides in the US and also pays the taxes.

Joint Account
A joint account is an investment account that is opened for two or more people with the proviso that both people who open accounts should have reached the age of majority in their state of residence. Joint account can either be set up as Joint Tenants with Rights of Survivorship-JTWROS- --or as Joint Tenants in Common-JTIC.

Opening both kinds of accounts is an easy process. It takes about five minutes to open an account on line. All you need to do is to select the account type you want to open and fill in your personal information.

You also have to read and confirm the subscriber agreements, which include the 'account agreement', 'customer acknowledgment of risk' and 'day trading risk disclosure statement'.

Besides these you are also required to comply with the exchange rules. So you have to read, understand and comply with both the New York Stock Exchange and the New York Stock Exchange data subscriber agreements. You should read the agreement as you scroll it down to the bottom. Read both the sections of the agreement and check both the boxes before you move on.

The next step is to choose your user ID and password. You also have to provide your email id for correspondence. You also need to select one of the four secret questions and provide answer to them. This information is needed to assist you to get your password in case you forget about it.

You have also to provide your personal information including your name, date of birth, residential address, marital status, employment, number of dependents, phone numbers, mother's maiden name, social security number and country of citizenship. You have also to provide your financial information including your employer's name, annual income, net worth and liquid net worth.

The Development Of Bond Market In India

The development of bond market in India has amazed a lot of people. The corporate debt market in India has seen growth of asset backed securities which were found to be quite innovative in the recent past. The inception of corporate bond has witnessed greater innovations. Instruments such as floating rate instruments, convertible bonds, step redemption bonds, zero coupon bonds gained greater recognition.

In 1998, ICICI Bank issued step bonds which paid higher rates of interest with the approach of maturity clearly showing the benefits of bond issuance in India. In the same year IDBI Bank issued the deep discount bonds which had two put and call options before maturity. Step bonds issued by IDBI had a feature to pay out the redemption amount in installments after an initial holding period. These ground-breaking issues provided a range of securities which helped in maintaining a sought-after risk return balance. Due to these corporate issuers, preference has changed from public issues to private placements.

If we compare equity market with the bond market during the past decade, the equity market saw a drop from 42 percent of GDP in 1993-94 to 28.6 percent in 2000-01. This was not the case with the Government of India (GOI) bond market as it saw the increase in market size due to large scale fiscal deficits, from 28 percent of GDP to 36.7 percent in the same period. This resulted in a reduction in liquidity in the equity market and a substantial improvement in liquidity in the Indian bond market.

But there were some drawbacks of the GOI bond market as it did not use trading as an exchange and featured a bilateral negotiation between dealers. Thus, the market lacked price time priority and the bilateral negotiation imposed credit risk on participants which narrowed the market with a homogenous credit risk.

How To Buy Good And Cheap Stocks

Many investors love to buy cheap stocks, but as Mr O'Neil (investors.com) puts it: "Stocks are cheap for a reason". In many (but not ALL) cases, investors do not realize that the stocks they bought cheaply belongs to a company mired in problems with slowing earnings, sales growth and shrinking market share. These are bad traits for a stock to have, regardless of how cheap it is.

Nonetheless, although most investors have lost money buying cheap stocks, there are still many savvy investors (read: Warren Buffett) who have made fortunes buying cheap BUT GOOD stocks. How did they do it? Below are some guidelines:

Buy a business, not a stock.
When evaluating a stock, see yourself as a business owner, not a stock investor. Only buy businesses that you understand. When you understand a business, you will be able to evaluate important questions like: Is the company's stock cheap because it is losing market share? What are the challenges faced by the company?

Buy stocks in companies that have a proven track record.
This includes a consistently good EPS, sales, equity and free cash flow growth rate and a long history of great ROIC (above 10% for the last 10 years).

Buy stocks that have a big MOAT
A moat is a 'protective shield' that a company has that prevents other companies from invading their territory. Examples of moats include

Brand name: The company has a very strong brand name, making it difficult for other companies to compete with them. An excellent example is "Apple", with its group of die-hard fans.

Secret: The company has a patent or trade secret that makes competition illegal or very difficult. Example: 3M.

Buy stocks with a good and honest management
Traits of honest management include admitting their mistakes (if the company did not do well for one quarter, they should admit it and explain how they intend to improve the situation) and accepting a reasonable compensation for their work.

How to buy Cheap Stocks?

At this point, you may be wondering: If a company has such an excellent track record and characteristics, why is the stock cheap?

Most of the time, these companies stocks are cheap because of a temporary problem (such as missing EPS estimate) or because the overall market is bearish. At times like this, you can normally buy the stocks cheaply, preferable at a 50% discount.

As long as one does his/her research diligently and is willing to wait patiently for a good price, he/she can definitely join the ranks of successful investors. A bear market (which is NOW) presents the best buying opportunities.

Indian Stock Market

Now in present days everybody wants make money in just few time. For that kind of people Indian stock market always beneficial. They can invest their money stock market because it gives return very fast except some time. Stock investment in India become popular. So every one who have some knowledge if stock market they are providing such kind of facilities to people's and some case they cheats people just because of their greediness So you need a that kind of facility provider who take cares of your money and provide security(Minimum risk factor) to your money.

Since last two years Indian stock market completely changed it shown the level of 2100 as well 1600 also but it remover's very shortly. It arose the interest of investor to Indian stock market not just only Indian investor's looking for business in Indian stock market but it have large amount of foreign investor's as well. Those people who know the market they always say that if you are short term investor you should leave market when you are getting maximum don't hope big gain but other hand they say's if you are a long term investor you should wait and stock market always gives good return to their long term investor's.

Now stock market not just a part time investment but it becomes business for those persons who are really interested in Indian stock market. They are taking as business and treat themselves as businessman that's why they are making money from their and they have hope to continue. So peoples who have something wrong in their mind for Indian stock market doesn't take any kind of hesitation and invest their money were they want to invest.