Trading online has become very popular in today’s time when you just need a trading account and after that you can trade comfortably while sitting at your home. Apart from comfort of trade it provides various facilities like:

• Ease of buying and selling of shares.
• Online receipt of contract notes/ trade statement for the transactions.
• Direct deposits of dividends/ bonus amount etc to account.
• Various trading tools for ease of making investment decision.

One click of mouse button is of ample importance while trading online because sometimes it is what that draws a line between your winning or loosing the game. Trading online is very interesting but you have to be a bit careful as well. The process of trading is very easy but making money is a bit tricky. All you need is a trading account and a little bit of caution to operate the same. Below are some do’s and don’ts while trading online:

Prices change at the blink of eye and the transactions are not always in real time. Moreover the speed of your internet might cause delay. So always make sure not to change your decision until the last moment. Take time examining the stock and make decision ahead of time so that you don’t loose while in panic.

An important feature of stock markets is volatility. So if you don’t keep a close eye on how your stocks move while placing an order, you might land up in losses.

Online trading is a matter of trust between you and your broker because there is no in-person contact. But you can’t leave everything on trust. Make sure your broker provides you detailed email statements and contract notes of executed trades.

Online trading provides facility to place limit orders. If you don’t have sufficient time to keep track of the stock prices, fix up a buy/sell price based on your judgement and go for limit orders. Moreover limit orders help you take ample advantage of volatile session during the day.

In addition to the brokerage rate being paid, prudent investor should always be well aware of the various Fees and commissions charged by the broker for various services offered like Mobile services, buy sell alerts, reporting, chart and other tools to facilitate easy trade as they really affect your net earnings.

For novice traders, it’s a suggestion to always trade with stop losses. Set your stop loss to level to avoid the risks associated.

Even though chances of default by a good brokerage firm are nil but a smart investor should always keep track of credit/debit of money in their bank accounts or transfer of shares to/from the demat account accordingly for each trade executed because technical reasons might lead to discrepancy which cannot be avoided.

Prevention is always better than cure. Security is another important factor for online traders. It is advisable always to follow security measures related to passwords and other personal information while login into the websites to eliminate chances of theft of identity and information.

RENUKA KINGER

Wikipedia defines Forex Trading as “The foreign exchange market (currency, forex, or FX) trades currencies. It lets banks and other institutions easily buy and sell currencies.”

With the current economic scenario, increasingly more folks see themselves prepared wherever they have to help make additional funds to carry on living to their standards. Additionally , there are individuals who learn how to make very good utilization of present day condition and help to make a continual income. It doesn’t matter the truth, you ought to learn how to trade the Currency trading, considering that this turned out to be to be the most effective way to gain a little extra money, and get a good profit while doing so.


The Forex markets is known for a three trillion US dollars trade every single day, therefore being the biggest tradable market on the globe. Simply because, or even better mentioned thanks, to the belief that most trades are usually speculative, any kind of real movement of foreign exchange is small – this really is these people key to getting a huge profit having a small investment.
Forex market doesn’t trade on the central exchange, the interbank marketplace staying the actual place exactly where deals happen, therefore two entities may trade with out going trough an exchange. In Simple terms, trading in currencies indicates buying one foreign currency while at the same time selling another.
If you would like to learn to trade the forex and try to get a profit, you have to learn how to get the best trades possible, the quickest possible way. For this reason it is recommended to gather all of the knowledge you are able to. There are many available resources on the internet that you need to use and there are also tools which will help you trade 24 hours a day, five days a week – like Forex robots.
More informative info regarding the Forex Market in order to learn how to trade the Forex is available here.

An initial public offering (IPO) is the initial sale of shares by a company to the public.

Broadly speaking, companies are either private or public. Going public stands for a company is changing from private ownership to public ownership.

Going public raises funds and offers several advantages for a company.

The dotcom growth decreased the bar for companies to carry out an IPO. Many startups went public without any income and little more than a business plan.

Getting a hot IPO could be very hard, if not impossible.

The process of underwriting involves raising funds from investors by issuing new securities.

Companies hire investment banks to underwrite an IPO.

The path to an IPO consists primarily of assembling the formal written documents for the Securities and Exchange Board (SEBI) and selling the issue to institutional customer.

The only way for you to get shares in an IPO is to have a frequently traded account with one of the investment banks in the underwriting syndicate.

An IPO company is difficult to analyze because there isn’t a lot of historical info.

Lock-up periods prevent insiders from selling their shares for a certain period of time. The end of the lock-up period can put strong downward pressure on a stock.

A tracking stock is created when a company spins off one of its divisions into a separate entity through an IPO.

Also See Initial Public Offering (IPO)

SEBI has recently allowed allowed registered stockbrokers to transact mutual fund units on behalf of their clients through the stock exchange mechanism. When the systems are in place there are a few points the investor has to consider while investing in mutual funds through Stock Exchanges (NSE and BSE)

- Existing mutual fund investors who intend to buy more units will also benefit as this system will allow them to keep track of all investments under a single statement.

- The SEBI circular on Friday also said that investors can hold units of mutual fund schemes in dematerialised form, and that the demat statement given by the depository participants would be deemed adequate compliance with SEBI norms. Buying and selling will become more efficient and transparent , particularly if investors choose to transact through a demat account.

- Though cost seems to be a factor for those who do not have a demat account, the impact will be minimal for those who already are demat account holders.

- End-users can use the convenience of their neighbouring broker’s office for their mutual fund transactions. However, once the broker starts acting as a distributor, there is an issue about what commission he might ask for and whether the client would be ready to pay that or not.

- In terms of convenience, the advantages are similar to investing online through the AMC’s website — reducing the clutter of paperwork and speedy execution.

- Investing in SIPs (systematic investment plans) – A reading of the SEBI circular on entry loads suggests that the entry load will continue to apply on instalments of SIPs registered before August 2009. As long as this loophole remains unplugged, existing SIPs will be at a disadvantage to the ones registered after August 1. The only way out is to stop the existing SIPs and start afresh in the same scheme.For those with SIPs, the only way to benefit from the entry load waiver is to stop them and start new ones in the same scheme.

- Switching from one scheme to another within the same fund house – As per the new guidelines, no entry load will be charged for purchases, additional purchases and switch-in accepted by any fund house with effect from August 1, 2009.Similarly, no entry load will be charged with respect to applications for registration under systematic transfer plans.

Source : ET and Hindu Businessline

Penny stocks are designated as penny in terms of their market capitalization.

These might be low priced due to some reason such as these are of the companies looking for a way to raise capital. These might have good management, better future prospects but with insufficient funds due to which their share is low-priced. It is a matter of fact that a smaller company tends to grow faster and thus their stock tend to move at faster pace. With this Optimism in mind, don’t forget Penny stocks could be worth millions as well. So before underestimating them; keep it in your mind that it might be great opportunity turning your small capital into big amount

Penny stocks are considered more risky investments due to greater volatility factor. Secondly, these are generally traded in lots of 1000. So even if the price goes down by 1 buck, you will loose 1000 bucks in fraction of seconds. Thirdly, penny stocks might not be so frequently traded on stock exchanges. Suppose some rumor broke out and you just wish to exit the stock. But since the stock’s trading volume is low, you do not find buyers to buy your stock. Keeping aside all these factors, a well planned strategy might take you to diamonds hidden inside a coal mine. But before you really enter into the arena ask yourself few questions:

What is there in that penny stock attracting you to buy it?

What is the price at which you must exit the stock?

Once decided upon the stock to buy, exercise your mind to know is it really worth buying? Below are the three criterion helping you take a final decision.

Company fundamentals: Good cash flow is the most important consideration in choosing a penny stock. Spare sometime in knowing company fundamentals in addition to its goodwill and future projects. If a company has a good chance of success, please go for it.

PE and PEG ratio examine the PE ratio of the stock you and compare it with its peers doing well in the market. A safer way however is to find out the Price/Earnings/Growth (PEG) ratio (PE ratio divided by the projected growth in the next 3-5 years). Remember you will choose a stock with higher PE but lower PEG.

Trading volume: Assume yourself in a situation when you want to sell your stock but no one is ready to buy it. Stocks with low liquidity are difficult to buy or sell for the prices you want. So think twice before you buy such stock.

That was all about the reasons for you to buy a penny stock and considerations while deciding which one to buy? But the story does not end here due to associated risks. The best strategy to minimize the risk is to plan your exit having decided your expected profits. Do not just pump and dump the stock for reason that it costs you less than other stocks and will reach very high levels one day.

All The Best

- Renuka Kinger

It is very interesting to invest in shares, though most of the people would like to start with small money.

First of all, you need to know a little bit in detail about the stock market, then about the shares and the mode of their trading. What are the risks involved and how to be smart in dealing with shares?

• Stock Market – It is the place where the shares of listed companies are bought and sold. In India, you have BSE and NSE as two big stock exchanges.

• Shares are bought and sold by you and me only through approved brokers.

• Approved brokers are mostly banks like the ICICI, HDFC, IDBI, UTI Bank, SHCI, are to name a few.

• First you need to open an account with a bank, that has the Demat account facility.

• Go to the respective bank  and open a Savings account with deposit of around Rs. 10,000.

• Tell the bank that you want to deal in shares and ask them to open a Demat account. It will be done automatically after signing a few forms.

• A Demat account is nothing, but the account where the shares bought by you will be kept separately.

• Only you could operate that account online, through Internet.

• You could open the online facility offered by the ICICI, HDFC or ShareKhan or others  and buy shares you wish and decide the quantity and the price.

• Here the bank will act as a broker. You online order for purchase would be carried out by the bank. They charge broker commission, much less compared to private brokers.

• It is very important for you to have enough balance to your credit in your savings account.

• As and when you buy on line, your Demat account will be credited with those shares. The money for the purchase will be automatically deducted from your account by the bank.

• You also have to keep looking for opportunities to sell the shares that you have already bought and kept in your Demat account.

• For buying and selling, it is necessary to familiarize which shares to be bought at what prices and sell them at what price.

• As and when you decide to sell (depending on the price quoted in the market) you could sell them through online trading system.

• The moment you sell your Demat account will be debited with the number of shares sold by you.

• Your account will be credited with the amount for which you have sold.

• Depending on the amount of profit earned, tax will also be deducted by the bank (TDS). The bank will give you a TDS certificate by the year end, i.e., March 31, of that year which you could attach with the return to justify the tax payment.

• When the shares could be bought or sold?
  Always sell the shares when the price is up and buy when the price is down. Every body had to adapt to this formula.

• What profit should it give you?
  You buy a share for a particular price. Take the amount as investment. Any bank will lend you at ten per cent interest. It will give you 24 per cent return if the share price rises in such a way. Do not wait for the market to crash and start searching for buyers for the price you quote.

  After selling, never look back and repent for what profit you have earned, had you delayed the sale. Be happy that it did not happen otherwise. This is the best way, to sell.

• If you want to buy, look for 52 week low, look for the peer companies, their price and compare it with the company you want to buy.

  Look for the prospectus, future plans and the profit the company ought to make in the next year. Take the perception or a change and buy.

• You cannot take profit in the buys. Losses do occur as long as you are at decent surplus for which you have no reason to be unhappy.

Happy Investing

Rule 1:  Don’t buy unlisted shares
There are over 20,000 public limited companies in India, of which only around 7,000 are listed on the country’s various stock exchanges. The first rule of profitable share investment is to confine your buying to these 7,000 listed companies only.

Stock exchanges do not permit trading in unlisted shares, nor do they permit their registered members, i.e. brokers to deal in unlisted shares. Therefore, if you want to buy unlisted shares you won’t get the protection of the stock exchange authorities; nor will you be able to use the services of your stockbroker in handling such transactions. Moreover, in the absence of stock exchange quotations you won’t be able to assess what the market price of an unlisted share should be. All these factors create complications and risks, which you are not likely to be in a position to handle. As a basic rule, therefore, you should avoid investing in shares of unlisted companies.

How does one know whether a share is listed or not? It’s simple; all shares whose prices are quoted in daily newspapers or websites are listed shares. Unlisted shares are quoted. Therefore, the fact that a share is quoted means that it must be listed. This is the easiest and surest way of fining out whether a particular share is listed or not.

Rule 2: Don’t buy inactive shares
Active shares are those in which transactions take place every day, or almost every day, on the stock exchange. At the other extreme are shares in which transactions take place rarely, if ever. The latter are called inactive shares. In this book, an inactive share has been defined as one, which is transacted less than two times a month, or not at all.

The main reason why shares are inactive is because there are no buyers for them. They are mostly shares of companies which are not doing well and whose future prospects appear to be dim. Naturally, nobody wants to buy their shares. As a result, existing shareholders of these companies find it difficult to get rid of their shares, even at very low prices. And, if nobody wants to buy these shares, why should you? Why should you allow yourself to get stuck with an investment, which you can’t offload at will, whenever you want to? We would strongly advise you to avoid investing in inactive shares.

How does one find out whether a particular share is inactive or not? The simplest way is to regularly scrutinise the stock market quotations, which appear in the daily newspapers. If you find that a particular share has not been quoted for a long time, you can presume it is inactive. Some newspapers, like The Financial Express not only indicated the last quoted price of each of share, but also the date when it was last transacted. This information can help you to confirm whether a particular share is inactive. Check out BSE or NSE Websites

Inactive shares can generally be bought at very low prices. This is obvious since such shares generally find no buyers. Inexperienced investors looking for bargains are often attracted to such shares by virtue of their low prices. This is how beginners are normally trapped in to making disastrous investments, Beware of such bargains! If you come across a bargain, remember there has to be catch in it somewhere. It is better to hunt for value, and pay a fair for it than to look for such apparent bargains.

Every time you buy a share, you must remember that one day you will want to sell it. If you are likely to face difficulty in selling it – don’t buy it! This is a sound investment principle, which you should never lose sight of, no, matter how cheap or attractive a particular investment may appear to be. Never allow yourself to get caught with illiquid share. They are only pieces of paper without any value. Shares have value only when they are readily encashable.

Of course, it is possible that a share, which is inactive today, could become active tomorrow; just as a share, which is active today, could become active tomorrow. It all depends upon the degree of buying interest in a particular share. If buying interest builds up in a share, it can easily move from the inactive to the active category.

Rule: 3 Don’t buy shares in closely held companies:
Whether a company is widely held or closely held depends upon the number of shareholders it has. In this book, we will draw the line at 5,000 shareholders. Companies with less than 5,000 shareholders will be considered as closely held.

Shares of closely held companies tend to be less active than those of widely held ones since they have a fewer number of shareholders and, thus, a smaller floating stock of shares. Shares of such companies tend to be ignored by the general public. Large institutional investors also tend to avoid closely held companies. As a result their shares do not get sufficient price support, which they would otherwise have got if they had been widely held. Moreover, it is always much easier to manipulate the share prices of a closely held company than those of a widely held one.

Share prices of closely held companies also tend to be more volatile than others. When they rise they rise very fast, and to a very high level. Conversely, when they fall they do so very fast and to a very low level. As a result, it is generally very difficult to buy shares in a closely held company when prices are rising, and very difficult to sell them when prices are falling. Investing in such shares requires a high degree of expertise, knowledge, alertness and quick thinking, which take years of active investing to acquire. We would, therefore, strongly urge you to keep away from such shares.

Source : Various Websites and Books on Share market Basics

Stock quotes can be obtained in newspapers and online but the most convenient place is online as it is very close to real time information. Website like Yahoo!Finance and rediff help you get real-time quotes at a mouse-button click. Different sources provide different sets of information. Some might provide with detailed information like corporate actions, mutual fund activity in the shares in addition to some basic price information. Below is the list of common figures in the stock quote details:

52-week High/low : These are the highest and lowest price recorded in the last 52 weeks. The highest/lowest price figures for past 52 weeks can help make a judgement whether or not you should invest in stock at current price .

Days Range: It is the price range within which a stock has traded on a day. It thus consists of high/low price the stock has touched in a day.

PE: It is the Price to Earnings Ratio of the stock (per-share earnings by closing price).

Open and Close: Close is the last price quoted on a stock during a day. Open price is the opening price at which stock starts trading for a day. Opening price may not be same as the closing price of the stock on previous day.

Bid and ask prices: Bid price is the price a buyer is willing to pay for a stock while ask/offer is price at which seller is willing to accept the stock.

Trade volume: It is the quantity of shares traded on the stock exchange on a day. It helps you determine the liquidity of stock as you might land up in trouble if you want to sell your share and there is no one to buy it

Percentage change: It refers to the percentage change between current stock price w.r.t to its previous close.

Market Capitalisation: It gives you an insight into the company’s equity capital available for trading and is the price of each share multiplied by number of equity shares outstanding.

Dividend: Some quotes also give the last dividend paid to the shareholders and can be useful in determining how much and what type of dividend can be expected from the company. This also details their record date, ex date so that you can decide upon what time will be right to invest in the stock to avail the dividend.

Renuka Kinger

Day trading conditions the most intense approach to stock market trading. To be on top of the fluctuations in stock prices, day traders spend hours together in monitoring the market. Day traders could make dozens of trades any day, sometimes in a matter of minutes hoping to grab the wave of price change. They avoid the risks of long term buy and hold. Day trading could be exciting, the fast pace attracting risk takers. Yet this strategy for stock market trading is only effective for day traders, who apply analysis rather then emotion to trading decision. Savvy day traders could turn profits quick. Emotional traders usually lose fast and leave disenchanted.

Swing trading uses a slightly longer time horizon than day trading, watching a stock for weeks or months before trading. This type of stock market trading relies on careful monitoring of fundamental and technical analysis. Swing traders often specialize in a certain business or industry so that they become experts in the movement within those stocks. They also have more time to study the company financial reports and industry forecasts. Since swing trading does not require hours of daily monitoring, it is a good strategy for the trader who wants to make money from stock market trading without turning it into a full time job. Even the study of reports could be done during the daily commute or lunch hour so that the swing trader stays well informed.

Position trading works well for investors who want to be involved in the stock market trading, but run short of time. Stocks are being held for months awaiting any changes in the trend. Position traders keep up with the fundamental and technical analysis as well as news events but apply a long term strategy to their stock market trading.

To understand this in a better way, let’s have a look at the below comparison chart between futures and option:

From the above description, it can be inferred that be it future or an option; these are the ways of hedging the risk of investments. It provides a protection against unexpected rise or fall in the price by entering into an agreement to be executed in future date. The concept is very old when agreement used to be made by negotiating the price for harvest of season having been unaware whether harvest will be meager or plentiful. When harvest time came, demand would rise sharply and ultimately giving the holder of agreement a chance to earn more than what he had expected.

Whatever be the case, playing options and futures has always been a risky. So better  be careful before you enter into the arena!!

Renuka Kinger

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