Frequently Asked Questions

What is Trading ?
Trading refers to the frequent buying and selling of the stocks to make profit , in trading the time frame used is lower as compared in investing , in trading buying and selling happens within minutes , hours or few days , it involves the use of technical analysis to make trading decisions.
What is Investing ?
Investing refers to the buying and holding of the stock for sometime, generally for a few months or even years , as opposed to trading it doesn’t involve making buying and selling decisions frequently , investing involves use of fundamental analysis for making decisions.
What is Technical analysis ?
Technical analysis involves use of technical charts to determine whether the stock will move up or down in the future by using the patterns that have already occured in the charts , technical analysis is further explained in one of our posts.
What is Fundamental analysis ?
Fundamental analysis is the analysis of the worth of the companies stock as per it’s financial statements , it employs analysis of balance sheets , cash flow statements , and the various profitability ratios to determine if stock is currently under priced or overpriced.
What is Shorting ?
Shorting is the method of first selling the stock and then buying later on when the price falls , hence leading to profit , so if anyone is bearish on the stock he or she can sell the stock first and later buy it when it falls further thus making him/her a profit.
What does being bullish and bearish means ?
If you thinks that the market or a stock will go up then it means that you are bullish on that market or stock and if you think that stock will go down then it means that you are being bearish on the stock , so bullish means banking on the rise of a stock and bearish means banking on the fall of the stock .
What is a trend ?
Trend is the direction in which is a stock is moving ,at a particular time the stock can be in any of the 3 types of trends that is it can be in an uptrend – moving up , sideways trend – moving sideways and doing nothing , downtrend – moving down.
Who are retail traders or investors ?
The common public like you and me who invest and trade with a limited capital are referred to as retail investors and traders .
What is Day trading ?
Day trading is a sub stream of trading , day traders generally square off their trades within a day that is they don’t take delivery of the stock and keep in their portfolio , they generally buy and sell the stock within few minutes or hours Of course this has it’s own advantages and disadvantages.
What does Delivery means in trading ?
Taking delivery of the stock means buying with intension of holding the stock for at least a few days if not months , taking a delivery is suited for investors and swing traders only as they hold the stocks for a minimum of a few days.
What is Swing trading ?
Swing trading means riding the swings in the market , swing traders generally hold the stock for a day to a few days , swing traders take delivery of the stock and keep it in their holding while riding the trend.
Who is a broker ?
A broker in a stock market is a person/organization that executes the sell and buy orders on behalf of their clients , brokers are the middleman who we have to contact to buy or sell stocks as we cant trade directly with the stock exchange , brokers are licensed by the exchanges to act as middleman between traders/investors and the stock market.
What is a stock exchange ?
A stock exchange is a place where traders and investors buy or sell stocks , it’s a part of the secondary market where the stocks that have already been listed are traded , NSE and BSE are the two most famous stock exchanges in India.
What is SEBI ?
SEBI is Securities and Exchange Board of India , it is a regulator of the Securities and commodity markets in India , it’s function is to monitor the securities market and make sure that it works in a proper fashion , it also protects the interest of the investors and traders .
What is Insider Trading ?
Insider trading is the act of using an unreleased or confidential information of the company to make gains in the stock market , it is a totally illegal information and a person can be banned for life from trading on stock exchange if found guilty of insider trading.
What is IPO ?
IPO means Initial Public Offering , whenever a private company wants to raise some money they can file for an IPO and ask the common public to invest in their company , this way the retail investors become part of the investors in the company and hold shares in it and the company gets the funds required by it.
Who are DII and FII ?
DII are the domestic institutional investors who are these large investors , mutual fund houses who invest in the stock market , these companies are Indian , FII are the foreign institutional investors , they are the foreign investors who invest in companies in a country other than their homeland.
What are Futures and Options ?
There are different types of markets where one can trade , either you can trade in equity , commodities or derivatives market , future and options are the part of derivatives market that is they derive their value from an underlying instrument which can be a stock or an index , in F&O buying and selling takes place in lots.
What are Lots in F&O ?
Lots are the bouquet of a fixed quantity of the stock that you have to buy or sell , in F&O you can’t just buy and sell a single share you have to buy/sell a lot where the lot may contain 100 shares for example , each share has a different lot size for the f&o segment so you have to look properly for the lot size before buying or selling.
What is Open Interest ?
Open Interest refers to the number of contracts that are outstanding on a particular day in the F&O market , Open interest holds an Important place in the f&o market just like delivery percentage holds a great significance in the equity market, OI tells the interest of the people in that stocks F&O segment.