All About Stocks

BTST is buy today sell tomorrow. Take any share and look at the last day’s close and today’s open rate. They are not same. BTST works on this rate difference. You buy the share today at closing time (i.e. just before 3:30 pm) sell it on higher rate the next day as soon as market opens(i.e just after 9:15 am). This is pretty effective way to earn money from market because when market is closed no Big shot can play game on the stock as they do in market hours.

Open interest is the total number of futures contracts or option contracts that have not yet been exercised (squared off), expired, or fulfilled by delivery. Price Open Interest Interpretation Rising Rising Stock is Strong Rising Falling Stock is Weakening Falling Rising Stock is Weak Falling Falling Stock is Strengthening

Check out the end of the data daily. How many shares have gone up, how many has come down and how many shares have not changed. This will give you a brief idea about market. Suppose market has gone up 2% but only 20% companies has gone up and rest of the companies are either negative or flat (this is when FII’s buying). Normal psychology of market is if market is going up then most of the shares listed in exchange will go up (this is when retailer buys). In September’10 FII’s bought a lot and increased the market to 10% in a month. In October’10 they started selling the stocks but kept buying the index future to keep the retailer invested. And in November’10 they started selling the index future also. Now market has started falling. Till when market will fall nobody knows. FII’s has created the same situation as January’08 and people are so dumb that they have faced the recession recently still then they are not able to understand what big people are doing. GOD BLESS

It is a fix profit situation. When you do arbitrage you fix your profit irrespective of stock movement. E.g. you have delivery of Stock A. Rate of that stock at NSE is 100 and at BSE is 102. Short sell it on BSE and Buy it on NSE. You have your Stock at got the profit. As soon the rate on both the exchanges gets equal, square off both the positions. (Suppose you square off your position at 95. Profit in short selling INR 7 and loss in Buying INR 5. Net Profit INR 2 . Suppose you square off your position at 105. Loss in short selling INR 3 and profit in Buying INR 5. Net Profit INR 2 .) Arbitrage can have plenty of possibilities. It’s up to you how many possibilities you can think about. I have just mentioned one.

Suppose you have INR 100 in your D-mat account, you can buy up to INR 500 for intraday. 5 times intraday margin is standard for every broking firm (it may vary from company to company). (Why 5 times? Because stocks have their circuit breaker at 20% ) When you buy shares for INR 500, INR 400 is paid by the broker. That’s why margin is given only for intraday. It is given for generating more and more brokerage. When you buy a share for 100Rs. Its your share, you can sell it whenever want you want to sell it. When you buy shares for 500Rs, you have to book profit or loss for the same day. That’s how people get loss from the market. And they curse market. Don’t trade on margins. Trade in your limits.

They say if you have bought share in NSE you cannot sell it on BSE. This is partially true. If you have bought share on NSE you cannot sell that share on BSE on the same day. If you have the delivery you can sell it wherever you want. There is no extra charge for this. So if you are selling the delivery sell on that exchange on which the rate is higher. You will easily get 10-15 paisa difference between NSE and BSE prices.

Suppose there is a share A which has 1crore share in the market and its value is INR 100. Its Capitalization will be INR 1crore*100. It suddenly starts increasing. It hits circuits on circuits and it reaches to INR 250. Say it takes 15 days to reach INR 250. Then its capitalization will become 1crore*250. Now think why there is so much money inflow in this particular stock. Because all retailers cannot invest in the same stock . Everyone has its own choice of share. It implies that there is some big shots are investing in that stock. So stay away from that stock. Because the day they start taking their money back from that stock it might come to INR 70-80. Your money will be one third of your investment. E.g. there is company named Thinksoft . its share rose 100 to 550 in no time. And suddenly came down to 110 levels. The people who bought that stock at 500 or above, they are still stuck in that stock and cursing their luck and share market. Stay away from those stocks wh

There are a lot of people who come on television and said to be technical and fundamental analysts. They talk about a lot of stocks and give tip to buy and sell shares. I have a question to them: Why buy only those shares which are already 4-5% up? Why sell only those shares which are already 4-5% down? They never say that buy the stock when it is 4-5% down. Why is it so? I have not found my answer yet. If their analysis is that good then everyone who watches television should become rich. So use your brains and earn money. Listen news but not expert views. Have you ever seen Rakesh Jhunjhunwala or Warren Buffet speaking on Television saying buy this stock, sell that stock? The people who actually make a lot of money from stocks they do not express their views to anyone. Analysts get money for speaking but you might lose your money by listening to them. So Be Careful before following anyone.

Take any share at 3:29PM and look continuously till the market closes. Now remember the last LTP at 3:30PM(as Indian Market closes at 3:30PM). And again see the closing price at 3:40. They are not same. Because closing price is not last LTP. Closing price is the average price of last 15 minutes (i.e. 3:15 PM to 3:30 PM) of that share.

All the firms like banks or insurance companies which invest huge money in stock market are known as Institutional Investors. Suppose LIC is buying in Indian market. It will be known as Domestic Institutional Investor (DII). And HSBC is buying in Indian market. It will be known as Foreign Institutional Investor (FII). They are known as the big players who have capability to move market.

To save losses SEBI has put a limit on the movement of a stock. That is known as circuit breaker. A share cannot go up more than 20% as well it cannot come down to more than 20%. Suppose share A has previous close as INR 100. It will move in the range of 80 to 120. It cannot go up more than INR 120 and it cannot move below 80. If a share is moving up continuously, circuit breaker for that share will be 20% for first 2 days then it will be 10% for next 2 days after it will 5% afterwards. There is no circuit on those stocks whose derivative is available.

Suppose a share is about to fall according to your prediction. And you don’t have it. What will you do it? Sell it. When it will come down buy it. Selling before buying is known as short selling. If you are short selling in Cash market you have to buy on the same day. Practice short selling. Intra-day traders make a lot of money from it.

1) Listen Everyone but have your own opinion. That should not be influenced by anyone else. 2) Be patient. 3) Do not panic by ups and downs. 4) Always remember the mistakes made by you. 5) Don't try to outperform market. Its above everyone. 6) If trading on futures either hedge or try to take small profits (i.e. try to get at most 1-2k per lot don't try to earn 10-15k because if you try to do so you might lose all your money in one go). 7) Shortsell on regular basis. 8) Not everyday is a lucky day. ALL THE BEST FOR TRADING.

When you get your D-mat account opened people some you to pay some of the brokerage in advance in order to reduce your brokerage. I met a guy whose capital was INR 25,000 in total still he was ready to pay the advance brokerage as INR 5,000. So that his brokerage may be .03% and .30%. But for that he was directly cutting down his capital by 20%. Reducing the brokerage won't effect much on your trade but reducing capital will do. In my opinion: Avoid pre brokerage schemes. As soon as you start generating volumes, broking firms automatically reduce your brokerage. I they don't you, can negotiate for that.

Some of the people consider that the current price of the stock is LTP (last trade price). LTP means the last trade was done on that rate this does not imply that next trade will be done on the same rate. Actually if you are a buyer price for you is the price of first seller and if you are a seller the price for you is the price of first buyer.

Rothschild: Buy when there is blood on the street. Warren Buffet: Buy when everyone is running away from the stock. Buy when there is crisis on the stock. e.g. When the share of Satyam came down to INR 7 after the crisis. Who bought it got 6-7 times return in 2-3 months. After the Mumbai incident the people who bought Taj hotel shares they also got pretty good return. Just after the twin towers incident in USA (also known as 9/11 incident), stock market suddenly falled and rised in the same way. Whoever bought the stocks at that fall, made pretty good out of it. Always have some liquid cash in your hand to buy the Stock at crisis.

There are plenty of books and websites which claim that they will teach you how to do the technical analysis and make hell lot of money. But I say there is no technical or fundamental in the market. Stock is all about sentiments. When stock goes down it goes down. And when it goes up it goes up. It follows no boundary. Trend is Friend.

When someone plans on trading he/ she asks the first question how much brokerage he/she has to pay. I can guarantee when you trade in stock market after certain time you really don’t bother about the brokerage. You just see the profit and loss. I will tell you about the brokerage and other charges which are applicable in trading. If you want to trade in stock exchange, you need a broker to open your account. If you are going through a broker obviously you have to pay the brokerage. The maximum limit of one side brokerage is 2.5% of the total amount set by SEBI. If you open an account with a broking firm currently the standard brokerage charged by them is 0.05% for intraday (if you buy and sell the stock on the same day) for one side (one side means one trade either buy or sell) and 0.50% for delivery (buy today and sell any day except the same day). For intraday the total amount charged is: brokerage + STT (security transaction tax) (i.e. 0.125% of the total volume)

Let me introduce you to the Stock Market. First of all what is Market? Market is a place where trading occurs. Someone buys and someone sells. Now Stock Market is the place where stocks are sold and bought. Now what is Stock? Stock (aka Share) is the ownership of a Company. e.g. if a company has 10lacs shares in the market and u have 1000 shares of the same company, it implies you have 1/1000 ownership of that company. Why should you buy the Stocks? We buy the stocks because we consider that stock will appreciate with time as price of land and house increases with the time. How can you buy the stocks? You can go to any broking firm and get your account opened. That is known as D-mat (dematerialized) account. As your money is deposited in your saving account, your shares or stocks are stored in your D-mat account in electronic form. What kind of return you can expect from Stock Market? Actually it depends only on you. If you trade yourself you can