What is Stock Exchange?

A place where Stock brokers can buy or sell Shares and Securities and other financial things is called Stock Exchange. In other words we can say where Shares are traded publicly Companies are bought and sold is known as Stock Exchange. The facilities of Stock exchange is transferring of funds between businesses and investors and comes under the Stock market exchange. In simple words to give Best securities to investments. Stock Exchange trading is the inner part of the Stock trading market . Stock market provides facilities to Stock Trading. Stocks are risky but they give a chance to increase the wealth of investors.

Stock Exchange Companies:-

In India there are Two famous Stock exchange companies available. NSE (NIFTY) BSE (SYNTEX) 1) NSE (National Stock Exchange) The NSE is called the National Stock exchange, The most of the trading is done in NSE. 2) BSE (Bombay Stock Exchange) Bombay Stock exchange (BSE) Established in 1992 it is the first asian stock exchange company to buy shares.

EXAMPLE OF STOCK EXCHANGE:-

If a person buys shares from A Company and now he/she wants to sell it so they will find a buyer so when the buyer gives an amount to the seller so here stock is exchanging. There are Two Ways to Buy Shares:- Primary Method Secondary Method 1) If anyone wants to buy shares directly from the companies so here primary method will be applied. 2) Suppose if a company gives its shares 10 years ago and we have to buy those shares, then we will not be able to buy shares from the direct company. we have to buy them from someone who buys the shares 10 years ago from the same company, then this method comes in Secondary.

How to make money in trading

Most of the new entrant get swayed away by the eye-catching video advertisements, some gets too excited by the blue sky stories. After a few days they find it to be completely opposite of what they had heard or saw in the advertisements. So, how to make money?
Making money in trading is a psychological game, it’s a very well established fact that about 95% of traders always make loses in trading, only 5% traders make money in the market. To be among that you need following competencies as a trader:

1. Money Management & Risk Management
a. Since Forex is all about derivatives trading, your broker would give you some margin leverage by default. Some may find it very exciting and luring. That exactly the first mistake is made. Here is an example to help you understand:
i. Person A has INR 10,000 to start trading in the Forex. Here we take NSE as exchange and Upstox as broker.
ii. 1 Lot of USR INR pair is equivalent to $ 1000. In another words if you buy/sell 1 lot of the said pair you are trading worth $ 1000. While broker may charge just 1% as upfront margin to execute the trade but it’s to be noted that your risk is at 100% of contract size which is worth INR 75,000 /per lot.
iii. As per the capital above, in INR 10,000 you can take positions worth 4 lot. Means you can trade worth $ 4000 (INR 3,00,000) by just paying 10,000 as margin.
iv. If you gain 1 rupee, you would make decent profits. Let’s understand that.
1. Gained Points x Lot Size X Each Lot Size. You can simply calculate your profits. See the example calculation below.
2. 1 x 4 x 1000 = INR 4000. That’s your profit. Well, that’s too good. Isn’t it. You would make 4000 on a margin of 10,000.
3. That’s 40% profit. Pretty huge, isn’t it?
v. Now let’s come to the other side of the picture. What if your trade goes wrong?
vi. You would end up as much as 40% of your total net worth in just 1 trade as per the above calculation. Remember, only 5% traders get the trades right.
b. So, focus on your basics. Define a Stoploss and put that in system. So you can protect your loses.
c. Don’t use 100% of your capital in 1 go. As a risk protection measure use maximum 50% of your capital to take trading positions. Keep some ammunition to manage your trades, in case your trade goes wrong.
2. Directly entering into Option trades?
a. Options are very lucrative, even lower margins compared to futures.
b. That’s another thing which people must understand that when you trade options you are actually predicting 2 things – Price and Time (in futures it’s just price mainly)
c. Therefore it’s possible that if price doesn’t move at all, means the price on expiry is same as of time you had option. You may still incur lose.
d. Therefore, as a new trader never start with options. Unless you understand options and it’s strategies very well.

3. Understand and practice the factors which make price impact. What are those?
a. News – local and international
b. Options data – Call and put/ Open Interest Buildup
c. Technical Charts – To help in predicting sentiments and price movements
d. Actions of various central banks – RBI, US FED, ECB, BoJ, PBoC etc.
e. Government actions on public borrowings and liquidity measures – Best way is monitor T-bills or 10 Yr. sovereign bonds yields
f. Most important – Monitor US DOLLAR Index. It would impact all currency pairs.
g. Keep a watch on Gold and Crude Futures.


Advantages of Stock Exchange:-

Stock exchange market is a good way to gain your profit but this is too risky knowledge is necessary, but before buying shares it is important to know about the turnover of the companies and future plans. If you have the right knowledge about stocks so you're ready to be a millionaire.

Disadvantages of Stock Exchange:-

If a company sells its shares doesn't take any type of guarantee about profit or loss. Share and stock exchange markets can Destroy or make an amazing life of a person so in other words risk is included. With the help of an assistant / Broker you can start stock exchange. So here is the information about Stock exchange also we've covered Pros and Cons of Stocks..

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