The meaning of trading is buying and selling and share trading means buying

and selling of shares.

i)Trader who does buying and selling of shares is called as share trader.
ii) Trader do buying and selling of shares without concern of companys
performance rather they do technical analysis and opportunity finder.
iii) Trader is not interested to know how well the company is doing.
iv) Traders are basically opportunity finder - Opportunity can be of any good
news or bad news or any government declaration or any companys
announcement, any opportunity that makes the movement in the share price
interests traders and they take respective positions in that particular share.
v) Traders keep themselves updated all the time and hence the trading has
considered as full time business/job.
vi) Trader do very frequent buying and selling of shares on daily basis,
weekly basis and on monthly basis
 Investing means to put (money) into financial schemes, shares,
property, with the expectation of achieving a profit.

Basically there are two types of people in share market

Investor and Trader.

A person who invests his/her money in companys performance to

get good returns during long term is called as Investor.

Investor buy shares of the company that he feel is having good

business and fundamental and in next couple of years the share
price of the company would go up and provide good returns.
Trader
Buying and selling of shares based on technical analysis or market trend
taking into consideration very short duration like from a single day to couple
of days is called trader.
Mostly trading is done throughout the day and which is called as day trading
or intraday trading.
Trader buys and sells the stock and he is not worried about the companys
performance or how good the company is.

Investor
Buying shares after analyzing the fundamentals of the company and holding
them for long term like from couple of months to couple of years is called as
Investor.
Investor buys a company only after analyzing its worth. If the current stock
price is available at discount (undervalued) then he buys it for long term
prospective.
 Mainly there are two ways of share trading.
1) Online Share Trading
2) Offline Share Trading
A) Online Share Trading
Doing share trading with help of computer, internet connection and with
trading and demat account is called Online Share Trading.
If you would like to do online share trading then you need to have a
computer, internet connection and online trading account. If you are
planning to do trading yourself then opening online share trading account is
advisable.
Basically people use online share trading who want to trade themselves.
 Essential of Online Share Trading

1) You have to open an online trading account with any of the bank or
financial trading system.
There will be nominal annual charges but in fact nowadays some of them are
offering free accounts.

2) A computer with internet connection but nowadays some people do trading

in internet cafe. Due to fall in electronic prices the computers are available at
very affordable prices in the market. If you have electricity problems then you
also need to have inverter.
Nowadays you can get internet enabled on your cell phone (which is called
GPRS) whose speed will be sufficient to do trading and also the charges of
GPRS are very nominal. Also internet broadband connection is available.
 3) After successfully opening the online trading account you will receive the
username and password with the help of which you can login in online trading
system and trade yourself.
4) The trading system executive (with whom you opened trading account) will
help you initially about how to use the online trading system.
But in fact you can request for demonstration of their trading system before
you open the trading account with them. Once you get familiar with the
system then you can trade yourself at your home or in the internet cafe.
1) No dependency on broker .
There is no need to depend on any broker or anybody else to place the order
or to square off your order. In short you are the boss of your own to do
trading (buying and selling) of shares.
2) Its reliable, convenient and you can take your own decisions yourself by
actual seeing or analyzing the market on the computer screen instead of
calling the broker all the time.
3) Its not possible or practical for a broker to update you about each and
everything about the share market, news which will influence or affect the
share market. Because he may be having many other customers like you and
even if he updates you it would be late and this news would have been
affected the concerned sector or share. So if you are doing online trading
yourself, then you may save yourself from big disaster by booking profit or by
coming out of the stock.
4) You will get news and updates on various websites and also on your online
trading system and most of the information will be free of cost.
Please note - Always remember share market always get influences (or
affected) by the appropriate news. So get updated or be in touch with news all
the time. This will benefit you always.
5) By doing online trading yourself, you can see and judge where market (or your
share) is heading by seeing different graphs online yourself, which is not
possible if youre trading through broker. Some online trading systems have
graphs integrated in their system, so your job is to just add those graphs and
check the status of current market (or share) and depending on your analysis
you can take steps towards successfully trading. (How to analyze graphs are
mentioned in different sections).
6) All your transactions and related documents can be seen online and can also
be downloaded to your PC without depending on your broker. You can also
check the status of your amount on daily basis through you online trading
system.
Doing share trading with the help of broker or through telephone is called
offline share trading.
In other words trading will be done by another person on your behalf based
on the instructions given by you. The other person would be a broker.
The broker will do buying and selling of shares on your behalf depending on
the instructions given by you. So in offline share trading you dont need to
have computer, internet connection but you need to have the offline demat
account.
Based on duration of stock holding, the different types of stock
trading can be classified as:
Day trading
Short Term Trading
Medium term trading
Long term trading
The types of stock trading may also be classified in relation to a
trend as...
Trend Following
Contrarian Investing
Range trading
 Day trading
Buying and selling of shares on daily basis is called day trading; this is also
called as Intraday trading.
Whatever you buy today you have to sell it today OR whatever you sell today
you have to buy it today and very importantly during market hours that is
between 9.55 am to 3.30 pm (Indian time).
In day trading, brokers provide margin to do trading. Means you get extra
amount for day trading. Suppose if you have 10,000 rupees in your account
then you can buy and sell shares worth rupees 40,000 (four times more -
basically margin amount depends on your broker).
So if you use margin amount for day trading then you have square off your
shares before market closes irrespective of share price or whether you are
making loss or profit.
If you dont use margin amount and trade only with your available amount
then no need to square off your positions.
Short Term Trading :
A trade period of more than one day to a few weeks is considered as short
term trade.
A stock is bought and held in position from one day to a few weeks.
A short trade is entered by creating a sell position, which is covered by buying
after one day or in a few weeks.

Medium term trading:

A trade period from a few weeks to a few months is considered as medium
term trade.
A trend is followed with tailoring stop loss.
Long Term Trading:
In this type of stock trading, stock is held for many months to many years.
Investment decision is made by fundamental analysis of a stock. Profit from
growth of the company, dividends and bonuses attracts this type of stock
trading.

Trend following:
Here a trader enters a trade by buying a stock in an Up trend or by selling a
stock in a down trend, anticipating that the trend will continue.
The trade is continued using trailing stop loss, till the trend reverses.

Swing trading, pattern trading and Elliot wave trading, with trailing stop loss, fall under
this category of stock trading.
Contrarian Investing:
Here a trader enters a trade by selling a stock in an up trend or by buying a
stock in a down trend, anticipating that the trend will reverse.
It needs experience to correctly anticipate a trend reversal.
Value investing is indeed a contrarian investing.

Range Trading
Here a trader enters a trade by buying at the lower level of a range and selling
at a higher level of a range, anticipating that the trend continues to remain in a
range.
 In Delivery Trading, as the name say, you have to take the delivery of
shares and after getting these shares in your Demat account you can sell
them at anytime (or you can hold them till you want, there is no
restriction).
In delivery trading you need to have the amount required to buy share
in other words you dont get margin amount as you get in day trading

For example - If you want to buy 10 shares of Reliance at price 1200

than you must have (100x1200) Rs 12,000 in your account; once you
purchased these shares will get deposited in your demat account (after
trading day and 2 additional days). Then you can sell these shares when
the price of these shares goes up or else you can hold them as long as
you want.
1) Short term investing:-
Share trading done from one week to couple of months is
called short term.
Basically technical analysis is used for short term trading.
But as it there is no any fixed criteria for trading some traders
even do short term trading based on news, Companys
announcements of quarterly results, news of merger and
acquisitions etc
2) Mid term Investing:-
Share trading done from one month to couple of months, say six
months to one year or two years is called mid term trading.
Fundamental analysis, Companys announcements of quarterly
results, are the basic parameters used for mid term trading or
investing. Some technical analysis even make use fo technical
charts and indicators for mid term trading.
3)Long term Investing
Investment for couple of years is called long term
investing. Long term investment may continue from one year to
10 years or even more. Long term analysis is purely based on
fundamental analysis of the company. But it doesnt mean that
once you do the fundamental analysis and invest for 5 years and
forget it. No. The financial quarterly results or half yearly results
of the company should be revived and monitored how the
company is performing.
 Most stocks are traded on exchanges, which are places where
buyers and sellers meet and decide on a price.
Some exchanges are physical locations where transactions are
carried out on a trading floor. The other type of exchange is
virtual, composed of a network of computers where trades are
made electronically.
The purpose of a stock market is to facilitate the exchange of
securities between buyers and sellers, reducing the risks of
investing.
 There are two basic ways exchanges execute a trade:
On the exchange floor
Electronically
There is a strong push to move more trading to the networks and off the
trading floors, however this push is meeting with some resistance. The futures
markets trade in person on the floor of several exchanges
 Trading on the floor of the New York Stock Exchange
(the NYSE) is the image most people have thanks to
television and the movies of how the market works.
When the market is open, you see hundreds of people
rushing about shouting and gesturing to one another, talking
on phones, watching monitors, and entering data into
terminals.
It could not look any more chaotic.
Yet, at the end of the day, the markets workout all the trades
and get ready for the next day.
Here is a step-by-step walk through the execution of a
simple trade on the NYSE
 You tell your broker to buy 100 shares of Google at market.
Your brokers order department sends the order to their floor clerk on
the exchange.
The floor clerk alerts one of the firms floor traders who finds another
floor trader willing to sell 100 shares of Google. This is easier than it
sounds, because the floor trader knows which floor traders make
markets in particular stocks.
The two agree on a price and complete the deal. The notification
process goes back up the line and your broker calls you back with the
final price. The process may take a few minutes or longer depending on
the stock and the market. A few days later, you will receive the
confirmation notice in the mail.
Of course, this example was a simple trade, complex trades and large
blocks of stocks involve considerable more detail.
 In this fast moving world, some are wondering how long a human-based
system like the NYSE can continue to provide the level of service necessary.
The NYSE handles a small percentage of its volume electronically, while the
rival NASDAQ is completely electronic.
The electronic markets use vast computer networks to match buyers and
sellers, rather than human brokers.
These markets have no central location or floor brokers whatsoever. Trading is
done through a computer and telecommunications network of dealers.
You still need a broker to handle your trades individuals don't have access to
the electronic markets. Your broker accesses the exchange network and the
system finds a buyer or seller depending on your order.
Stock prices change every day as a result of market forces.

Share prices change because of supply and demand. If more

people want to buy a stock (demand) than sell it (supply), then
the price moves up. Conversely, if more people wanted to sell a
stock than buy it, there would be greater supply than demand,
and the price would fall.
1. At the most fundamental level, supply and demand in the market
determines stock price.
2. Price times the number of shares outstanding is the value of a
company. Comparing just the share price of two companies is
meaningless.
3. Theoretically, earnings are what affect investors' valuation of a
company, but there are other indicators that investors use to
predict stock price. Remember, it is investors' sentiments,
attitudes and expectations that ultimately affect stock prices.
4. There are many theories that try to explain the way stock prices
move the way they do. Unfortunately, there is no one theory that
can explain everything.
A share price usually goes up when
A companys performance exceeds expectations of the public.
Lots of people want to buy the shares to reap the rewards of the
profits.
Not many people want to sell the shares.
There are not many shares left.

A share price usually goes down when

A companys performance is disappointing compared to
expectations of the public.
Lots of people want to sell the shares.
Not many people want to buy the shares.
There are too many shares.
Thank you