Start Trading

I am planning to write a series on basic trading – only stocks, Intermediate level – Margin(Day trading) , advanced level : Derivatives for stocks and currency. Simultaneously I’ll post something on current market situations also.

My first rule with which I started trading ” Start with the risk capital which you can lose it, losing this capital should not affect your regular life and your goals”. Don’t invest all your savings in stock market.

Let’s get our basics clear.

• How to start trading : Select your broker. There are plenty of options available these days like icicidirect, Reliance Money, SBI, KOTAK etc. all are almost same. I would prefer online trading which gives more control and understanding of what’s going on with your trading.
• Settlement types: When you buy a stock, it’s called transaction day=t. Amount will be deducted on t+1st business day and stock will be available in your account on t+3rd day. Same thing with sell, stocks will be deducted from your account on t+1st day and amount will be deposited on t+3rd day. This is applicable for cash (delivery) trades.
  There are some variations available like spot sell: with little bit extra brokerage you can get the selling amount on the same day.
• Buy today sell tomorrow (BTST): Some stocks qualify in this category. You need to check your broker for which stocks qualify for this. Generally almost all A group shares fall in this category. Suppose you bought 100 bharti airtel at 340 today and it shoots to 380 in next trading day you can sell your 300 bharti and book your profit even though shares are not arrived in your account. There might be some extra brokerage for this, it depends on each broker.

With this you can start buying and selling stocks. For all non traders, you can start trading this Diwali.

All existing traders, what are your picks for muhurat trading??

Finished putting up lights in balcony in freezing 8 Celsius temperature but it was worth it, Now Its looking like Diwali is coming.

Happy Trading!!

Systematic Investment Plans

Here I am with a new post !!

Every investor has gone through a question while investing, is this the right time to buy? The answer is you cannot time the market. It’s beyond our capability. Now with internet speed increasing day by day, information is readily available through blogs, news channels, web sites, iphone applications etc. Markets have become very volatile these days because of that. Whenever you invest your hard earned money, you should be very careful.

Systematic Investment / Withdrawal plans are the ways to invest in mutual funds. It’s like a recurring plan in bank where you have to deposit a particular amount every month for designated number of months.

SIP’s are very good investment options for people with limited financial knowledge, people who are very busy with their regular job, and housewives to save their regular income in MF. If you be systematic in your investment it’ll average the investment amount over number of months. This technique will eliminate the skill required to time the market. Also SIPs make you save particular amount every month so it’s like a disciplined way of investing. I like these plans very much for this reason.

MFs give growth as well as dividend option while choosing these types of plans.I saw people getting confused about which option to choose and finally land up choosing whatever their broker or bank suggests. It’s your money, you should be the one who makes the decision and not somebody else.

As I mentioned above, if you are very busy and don’t have time to look at your investments for months or you don’t know when to sell your MF units – go for dividend option. If you track your portfolio on a regular basis and have knowledge about market movements go for growth option. Growth option will accumulate the gains in NAV whereas dividend option will distribute the gain at regular intervals.

Some tips to choose mutual funds!!

• Check the average market capital, prefer > Rs.10,000 cr.
• There are different types of funds available like equity – high risk, balanced – moderate risk and debt – low risk.
• Check past performance.
• Check dividend history
• Don’t fascinate with big names, after all MFs are also doing a business. Do your homework and invest.
• Very good website for researching MFs : Value Research

In the next post, i’ll try to write something on advanced trading. Appreciate your comments about how the posts are coming.

Trading Basics

I don’t know why they don’t teach how to invest money as a subject in college. One of the biggest question I had with my first salary was what to do with the money left after paying rent and buying gifts for my family.

Being from a traditional Gujarati family, I was familiar with stocks and I have seen 90% of people investing in stocks for making money in short time. Very few people consider it as an long term investment.

I know some people who trades in stock market just for sensation – a gambling sensation. One should have control on his mind about entry and exit points. There should be some reasoning behind your buying / short position, I have seen people blindly following recommendation from investment web sites. It’s like going to a fortune teller and asking about your future in return of some fees. If he is capable of forseeing the future, he himself would have been a millionaire by now.

Before buying any stocks, you should ask very basic questions to yourself like what is the nature of business it do? How’s it order book? What price range it is trading in last year.

Successful trading requires the ability to take meaningful risk, but also the capacity for controlling that risk. One can trade for sensation and one can trade for profits, but rarely can one do both.

Gold crossed $1000 mark today, I am very bullish about this commodity. I am seeing more upside today in Asian as well as Indian markets!!

Looking forward to Nadal’s game today in USOpen!!!

Happy Trading !!!!