Share Trading

The Securities and Exchange Board of India declares in their mission statement that their job is to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. Basically, this translates into the Securities and Exchange Board of India maintaining the interests of investors and investment opportunities in order for them to remain fair, transparent and fiscal responsibility on the part of traders and companies alike. It is important for the board that overlooks the management of the Securities and Exchange Board of India remain free from any conflicts of interest and remains impartial in their decision making process. This protects both traders and companies from any undue liability thrust upon them from the board members allegiance to any specific individual or company.

The Security and Exchange Board of India was created by the government of India to help regulate share trading practices and ensure that individuals and companies who exchange securities are covered by laws that protect them. It also promotes fair trading practices within the industry and investigates claims made that are related to share trading and securities investment. It is also responsible for enforcing penalties imposed and pushing legislation that supports reform in the share trading and securities industry.

Since its inception in 1992 the Securities and Exchange Board of India has ensure that the industry has been protected by illegal investment and insider trading. It has ensured that the stock markets that operate within India provide their clientele with a transparent method of overlooking and undertaking business transactions for the benefit of individuals and companies. It is also responsible for ensuring trade is conducted fairly and in a mutually beneficial faction for both parties who undertake a securities based transaction. It is the first line and the last line in regards to the protection of those involved with securities exchange transactions in India.

The National Stock Exchange (of India) is believed to be the biggest stock exchange in India – in relevance to the volume of trades and its daily turnover. It is situated in Mumbai, India. The National Stock exchange is owned by an array of financial institutions. Despite this; it is a commercial entity unto itself. It is considered the third biggest stock exchange in the world and often believed to be the second fastest growing stock exchange in the world due to its large volume of trades. It is one of two major stock exchanges in India. Whilst it is not as old as the Bombay Stock Exchange, it rivals it and even surpasses it in terms of how many trades it does.

The National Stock Exchange has been the source of many innovations in the field of electronic stock exchange methodologies. It has also been responsible for offering certain equity bonuses to its traders and partners. Because of its close ties to the finance sector in India it enjoys a large amount of industry trust and interest from international investors. This is no small feat considering the National Stock Exchange has only been incorporated for less than twenty years. It was incorporated in 1992 and it wasn’t until 1993 that it was recognised as a stock exchange. They did not have a business plan until after the stock exchange was actually recognised as what it was.

The National Stock Exchange is responsible for ensuring that stocks, bonds and financial equity can be traded in a transparent way. It is also responsible (along with the Bombay Stock Exchange) for the vast majority of share transactions in India as they apply nationally and internationally. It offers electronic share trading systems that were established in the year 2000 and enjoys a broad range of customers that stretch globally.

Intraday trading is a share trading methodology that is centred on buying a share and selling it in the same day (akin to day trading). There is much more too it and it can be quite complicated ground. If you are new to the share trading scene you may want to consider starting out with an easier method of trading such as the delivery based method of stock trading. Essentially, an intraday trader will do their best to leverage what they can borrow on their securities by loaning the shares then selling them on for a profit. You are normally required to have an account with the brokerage or trade specialist you are registered through and a certain amount of capital in the account before being allowed to use this method of trading.

As a rule, you can’t keep the full amount you are entitled to loan any longer than the full day. You can keep approximately fifty percent of your initial investment tied up by the loan. This gives you a little room to strategise in the event the shares that you have borrowed on have not reached the potential you first expected them to reach during the day (in fact it is dangerous territory because you may have lost money on the initial loan if the shares drop any lower in price). You can sell fifty percent of those tied up by the loan and hope that the shares gain a few points overnight. It can be pretty risky. However, with the right risk management techniques it can pay off quickly and relatively risk free.

Whilst this form of trading is not really recommended to people who are new to the industry – it is worth learning all you can about before you attempt using the stock market. It is nice to know your options when you start becoming proficient at other methods of stock trading.

When a company wishes to put itself up for public trading it will start by setting a price and putting itself up for share trading with an initial public offer. An initial public offer can be a pretty big gamble on the part of the investor. It is difficult to determine whether the company will lose points off of the price it has set in its initial public offer. The future of the stock itself is uncertain because there is no history to gauge how well the stock will perform. Because many companies are going through a period of transition when putting their company on the stock exchange it is hard to say whether or not the transition will result in increased profitability for the company (meaning stocks are likely to go up) or whether it will grind the company into the ground.

A good way to gauge whether the company whom you wish to invest in is likely to remain profitable and become a good investment is to check their track record. If the company is well established with many customers then you can probably be assured that the company is likely to remain profitable in the long term. However, if the company has become profitable from a passing trend that may soon fall out of fashion (i.e. the company that created the shoe known as ‘crocs’) then you should not invest in them. It is important to do some research after a company has released their initial public offer and their intention to become a publicly listed.

Whilst it might be risky to invest in a company after they have released their initial public offer – if the company is something that is likely to have long term profitability it might be worth buying a few shares. Think of Google. If you bought shared whilst they made their initial public offering you would be sitting on shares that have increased their value by one hundred fold by now.

Delivery based share trading is the best way to become accustomed to using the stock exchange in order to create profit. It involves buying shares and selling them only when the shares are received into the buyers dematerialised account (demat account). A demat account is required by Indian law (issued and regulated by the Securities Exchange Board of India) for Indian investors who wish to trade on the stock and securities market. A demat account is an electronic account which records ownership of any shares owned by the investor. It takes the place of a paper based account that is generally given as a set of certificates to denote ownership of a specific number of shares from a specific company.

Delivery based share trading differs from day trading in that you must have a record of ownership regarding the shares before being able to sell them. This is why it is an excellent starting point for investors who are new to share trading. It gives the buyer a chance to think about when and why they should sell their shares. Although the transfer of ownership of shares is almost instantaneous it gives the buyer a little more room for error. It is also a cheaper option if the buyer uses a demat account because they do not have to pay a stamp duty on the transfer of any shares they purchase (an advantage of the instant electronic methodology of share trading).

Because the delivery based share trading system will only allow you to sell shares you have verified as belonging to you, it can greatly reduce theft, fraud and poor decisions. Because the investment is sent directly to the buyers account, the speed at which you want to sell your shares is not a lot more time consuming than the methods that a regular day trading system works.