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Money Talk > Investing, Stocks and Bonds

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The Kick of Quick Bucks  Reply with quote  

Just how many times have you purchased a stock on a person's advice to produce a quick buck and waited for months, may be years, to simply recover your cost? Share trading, experts warn, is a risky game. However, it's possible to play it smartly and make a quick buck as well, they do say.

Sandeep Nayak, executive director and chief executive officer at Centrum Broking, says, "the key attraction of trading is the fact that people feel they are able to make money that is quick. But there are no lunches that are free. Trading requires a complete lot of discipline."

Should you invest in gold or silver at current prices that are high?

While traders do make along with losing cash, whether this activity suits you varies according to your financial position.

"Once you do your financial planning in more detail, you know what your commitments are, plus your risk appetite," says B Gopkumar, executive vice president, Kotak Securities.


You are able to trade in shares and commodities. However, in India, retail investors mainly trade in stock futures and options on account of volumes that are sheer. Trading means buying and selling a stock the same day or holding it just for 2-3 days. The former is called intra-day trade. The latter is known as a swing trade. Positional trade generally involves taking an extended position and holding a stock for 2-3 weeks.


Profits rely on risk management. "We have been in the market for 10-12 years and I have observed that folks do make money by trading shares," says Centrum's Nayak.

Safety methods for dealing with market volatility

This depends to a large extent on simply how much capital is present, exactly how many opportunities you're able to explore as well as your familiarity with technical analysis.

"The returns depend on your risk appetite, how much money you invest and exactly how a lot of your trades turn into profitable. You could make 3-4% in a day if not lose cash," says Gopkumar.


While any recipient of this so-called 'hot tip' can trade, making money consistently is achievable only once you have sufficient knowledge of the markets and skills for technical analysis, that will be the science of forecasting prices according to historical data.

Case StudyCASE STUDY 1: Niraj Dalal


BCom, MCom, CA


May 2007


Rare Enterprises, an asset management firm that is proprietary



PREFERS: Trade in derivatives and stocks

LEVERAGE: three times the main city, or 1:3

LIMIT: 5 stocks and 2 indices

FREQUENCY OF TRADE: depends upon market conditions

Niraj tried his hands at management and accountancy consultancy prior to getting interested in the markets. He joined Rare, a secured item management firm, in 2006 and took up trading seriously in May 2007 June. He is passionate about trading and does not focus way too much in the long term.


For every good trader, there clearly was a period as he forgets whether he is trading to generate income or to prove that he's right. As he is targeted on the latter, that is when disaster strikes

The software for technical analysis is present through the internet at no cost, but with limited features. Professional software with the capacity of highly detailed analysis comes at a high price. You should either have knowledge of technical analysis while the market or consult the connection manager for the brokerage firm, says Gopkumar.

Stock exchanges, like the Bombay Stock Exchange additionally the National stock market, offer courses in technical analysis. Another institution that offers such courses is Online Trading Academy. "People should trade only when they can take risk, control emotions, set targets and book profit/loss at the target point," says Harikrishna Makwana, education director, Online Trading Academy.


While it's possible to get trading that is many, their execution is important. Derek Zelek, the master instructor at Online Trading Academy, says, "It's a battle of emotions. Trading is simple, not easy. You should be disciplined."

The significance of discipline in share trading is not overstressed. That is mainly because in most cases when individuals are earning money, greed makes them wait to get more, and in addition, they do not book profits. When prices fall, fear makes them sell fast. These situations may be avoided if they know when to book profit/loss.

If losses are not a deterrent as well as the market's roller-coaster movements provide you with a higher, below are a few habits and skills which will help you remain on the track that is right. These are helpful for day traders as well as positional traders.

Discipline: the answer to success is a stop-loss order. Stop loss helps a trader sell a stock when it slides to a certain price. Suppose you purchase shares of company A at Rs 100 and set a stop loss at Rs 95. When the price falls to Rs 95, the shares are going to be sold automatically. What this means is you have got limited your loss to Rs 5. While entering a trade, you ought to be clear about how exactly loss that is much is prepared to accept.

Skill: Trading is an art and craft, says Derek. "You need to learn what to not ever do along side what you should do. It's also wise to learn how to spot amateurs and trap them and just how to take positions. Also, you need to be quick to get in and very quick to leave," he says. Plenty of amateurs in the market buys at a wrong point. A skilled trader identifies such people and takes an opposite position to trap them.

Planning: One should identify stocks that are few and focus on them.

Minimum capital: Only those with a capital with a minimum of Rs 2 lakh can trade for a meaningful gain. However, this capital ought not to be borrowed and should not be part of your core savings. People may also trade with less, but volumes are essential. So, a certain capital that is minimum a must.

Stock volumes: A stock needs to have enough volumes because of it to become tradable. According to Zelek, it must have a minimum average that is daily of 500,000 shares. For those of you just starting, trading Nifty-50 stocks is an idea that is good he says.

Budget range: What should you choose to do with a share that has high volumes yet not price movement that is much? You really need to prefer shares with a price that is a minimum of Rs 10. This means the average difference between a stock's intra-day high and intra-day low should always be at the least Rs 10.

Timings: seek out the most volatile market timings. Derek says 9.30-11.30 am is a time that is the good trade in Indian stock markets.

Volatility: Any stock with a positive beta of just one or above is great. A beta of 1 means the stock will move around in line with the market. In the event that market falls 2%, the stock will even fall 2%. "One can have a look at a maximum beta of 2 or 2.5, not more than that," warns Derek. There is a stock's beta when you look at the trading software.

Supply-Demand: One has to be aware of the supply and demand of individual stocks. In the event that number of shares up for sale is more, you ought to not choose the stock, and vice versa. To understand if the sell quantity is more or perhaps the buy quantity is much more, one cannot count on the bid and inquire numbers available on the screen. Only a technical analysis can help identify the supply and demand in individual stocks, says Zelek.

News Flow: trade on news never that is out in the marketplace. It can take minutes that are few a stock price to fully adjust to any news.

Average out: As soon as the cost of a stock starts falling, people buy more to average out. In trading, it really is a strict 'No'. "As a professional trader, I would never average out. It's a trade that is losing. The trade is going bad. I would personally rather wait for the right time to enter again," Makwana says.

Do you think you can immediately start trading along with these tips? The solution is "NO". One needs to produce a few skills, like the ability to understand analysis that is technical. "Trading is a process that is simple but not easy," says Zelek.

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Post Fri Jul 28, 2017 6:26 am
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Post Sat Jul 29, 2017 11:05 am
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