Some important parameters to ascertain before making choice of investing in a company.

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There are various investors who believes that investment in equity, commodity, currency is similar to gambling and good returns are merely results of good luck. However reality is different as good returns are results of systematic and disciplined trading practices. By investing in a company’s share you get a part of ownership in that company depending on the number of shares you hold. More number of shares implies your ownership will be greater. Therefore it is required to perform quality research work before investing. Financial advisory services providers can also be consulted to get useful suggestions. To understand how a company is going to perform both quantitative and qualitative factors are to be studied. Investors mostly gives emphasis to quantitative factors like debt-equity ratio, pay-out ratio, dividend ratio and neglect other qualitative factors. But ideally this should not be the case as both are equally important.

Some important factors which investors should consider before investing are discussed below:

1) Business model which company is following

Business models tells about how company creates its values and generates revenue. So before studying different ratios mentioned in financial statements understand what company actually do and how revenue is generated.Understanding business model enables to identify factors which actually contributes for the growth of company.

2) Management

Performance of a company hugely depends on its management as even well planned business model fails if leaders are unable to execute plan in an appropriate way. Details of management is easily available on company’s website. You can study their educational background, past work history.

3) Rules and regulations

There are certain rules and regulations which industries follow. In a specific industry two or three companies represent the entire industry and government usually states how much profit they are allowed to make. If a company has potential to earn profit more then it then also it can not. Investors should study these rules and regulations to identify potential risks and rewards of investing.

4) Competitive advantage

Sometimes when a company faces strong competition then some of its resource are utilized to fight against that competition and not used for generating good value for shareholders. In long term a company’s success depends upon its ability to maintain competitive advantage. When company’s achieves it then its shareholders are likely to receive good returns. Therefore ensure that whether the is company able to sustain competitive advantage or not.

These are some of the factors which has its impact on a company’s performance and further decides how much revenue a company is likely to generate. Traders can take experts recommendation in the form of mcx tips , trading tips and more to be on safer side and trade in an efficient manner. Blindly investing in market will never help to succeed here. Always try to evaluate company both qualitative and quantitative factors and invest according to your risk bearing capability.

What is meant by derivatives contracts and how to trade in it ?

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Derivatives are financial contracts whose value is derived by underlying asset where asset can be anything like stocks, commodities, bonds, currencies.These contracts enables to earn good profit by betting in right direction on future value of underlying assets. Hedgers, speculators, margin traders, arbitrageurs are the different participants here. These participant prefers to use financial advisory services to be on the safer side and minimize risk level. Derivatives can be traded over the counter or on an exchange. Trading on exchange has a benefit that traders do not have to face there counter party risk.

Following are the types of derivatives contracts:

1) Forward contract

Forward contracts represents an agreement between a buyer and a seller who agrees to buy/sell a particular security on a pre decided date and price. There is no role of exchange here and traders may face counter party risk because of absence of regulatory body.

2) Future contract

Future contracts are standardized forward contracts as these contracts are traded over exchange. Here there is no counter party risk and both the parties are under obligation to fulfill the requirements of contracts as stated.

3) Options contract

Options contracts are similar to future and forward contracts with one key difference that here both the parties are not under any obligations. Call option and put option are its two major types.

Following are the guidelines using which trader can trade in different derivatives contracts:

1) Perform quality research work at your own end. Get familiar with different terminologies used in futures market. Understand the fact that strategies used here are different. For example if you are expecting that in future price of some stock will rise then you will enter in its buy transaction in-case of stock market but here you will have to enter in sell transaction of that stock.

2) Identify margin amount which is required to be maintained and arrange it, as you can not withdraw that amount from your trading account at any point until the trade is settled.

3) Make sure your present trading account can be used to trade in derivatives, if not then consult your broker.

4) Understand your risk bearing capability and then identify in which derivative contract you want to enter. Make decision wisely which fits your budget as well.

5) You can wait until expiry date once you enter in contract to settle trade. You have two options once you take your positions either pay the outstanding amount or take opposite position in market to trade.

Primary aim of traders and investors here is to hedge against future price risk.Traders can manage their risk and returns in a better way by considering mcx tips with precise levels. Derivatives trading can be profitable only when a trader is fully aware of different risks like counter party, underlying asset, price and expiration associated with it and knows how to deal with them.

What are the different approaches which traders follow while picking up stocks for themselves ?

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There are several stocks which are listed over different exchange of Indian stock market. Traders and investors faces difficulty while picking up stocks.Also this is a very important decision of a trader as returns which are earned at the end depends upon the performance of stock. Market experts recommended trading tips, mcx tips helps traders to trade in a secure way as it suggests precise target and stop loss which should be used while placing orders.Every individual trader has its own trading goals which they wants to accomplish and therefore they adopt different styles of trading.However different trading approaches are governed by similar factors like risk bearing capability, preference of asset class, expected return and more.

Among all the approaches two most popular one are top-down approach and bottom-up approach which are discussed below:

1) Top-down approach

Traders using this approach takes into consideration macro economic factors like gdp, monetary and fiscal policy, government norms, exchange rate. They study these factors and further decide which stocks will appreciate in its value as a result of changes in these factors. The next step to be followed here is choose sector/industry which you believe is going to help you in earning desirable returns on long term basis. Third and final step is to identify individual stocks on the basis of their fundamentals. This approach is usually followed by traders who wants to trade in stocks of companies with high growth rate and are not willing to go for cheap stocks.

2)Bottom-up approach

While using this approach traders examine fundamental factors of the stock which defines the performance of a stock. Factors like company’s management, price/earning ratio, debt/equity ratio, market capitalization, dividend rate are studied here in order to understand how a company is likely to perform in future and what returns it will generate. Here no emphasis is given to market trend or economic conditions , focus is only on the factors which will decide the performance of the company at the end.

Both the approaches discussed above has their own significance and depending on trading goals and personal beliefs a traders decides the approach he wants to follow. Top-down approach starts with studying broad economy then further studying industry and company. In case of bottom-up approach significance is given to fundamental and qualitative factors.To improve market returns financial advisory services like mcx trading tips and more can be followed while trading in market. Such experts suggestions helps to trade in an efficient way with minimum risk. Especially if you are an unexperienced trader or do not have good knowledge about market then considering such suggestions can help you in achieving your trading goals as market experts after performing quality research works suggests using which levels trading should be done.

What is meant by bear and bull market trends?

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Bull market

Market is said to be bullish when it is rising and number of buyers are far more than number of sellers. Usually market is bullish when country’s economy is strong, employment level is good and market participants believes that this uptrend will continue in long term. Traders and investors are optimistic here and aggressively buy and sell stocks.Rising market is the best time to start buying stocks as profits can be realized when stock value is at its peak. Following financial advisory services can help in earning more profitable returns here.

Bear market

Market is bearish when it is falling and there are very few buyers present. Here price of securities keeps on decreasing and sellers finds it difficult to sell as number of buyers present is very less. Traders are pessimistic and have a strong belief that market price of securities will fall further. A common characteristic of bearish market is high volatility.

Characteristics of bull and bear markets

1) Trading psychology of investors and traders

In bull market almost everyone is interested in market and more number of buyers exists as they are expecting that market will keep on rising and when stock price at its peak they can earn good profit. During bear market, negative sentiment prevails in the market and investors are looking to quickly sell out share which they are holding. Market participants loose their confidence and decides to keep their money out of the market.

2) Supply and demand

Supply and demand follows different patterns under bear and bull market. In bull market strong demand is seen for shares but supply is weak which leads to further increase in price of shares. In bear market demand is less and supply is more which leads to further decrease in price of shares.

3) Changes in economic activities

The companies whose stocks are listed over different exchange of stock market are the participants of large economy and thus market and economy are closely related. Market is bearish when weak economy is prevailing in country and most of the companies are not able to perform well because of which its share price gets declines. On the other hand bull market is aligned with strong economy and companies are performing really well.

Market movements are highly unpredictable so investors should invest their money carefully after understanding the current market trend. Also it is advised to trade with the market trend to be on the safer side and avoid earning losses. Both bear and bulls will have its impact on your investment therefore take time and carefully take your decisions at the time of trading. Traders can follow mcx tips and more as well to ensure their good earnings. Remember that in long term market has posted a positive return. Follow disciplined trading practices and stay updates with market trends and updates to frame a wise trading strategy.

How traders can take advantage from volatile markets ?

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For making money from financial market a price movement is must required. Under different market conditions price movements are not same. Sometimes tone of market is relatively quiet and other times price movements takes place at an above average rate of speed. The good thing is that as volatility increases it brings more opportunities to traders and investors for making money. Traders can follow experts suggested mcx tips and more to make optimum use of such opportunities. With high volatility risk is also high and it can be said that there is possibility traders may loose a great deal of capital, therefore traders needs to be extra careful.

Steps to follow to take advantage from volatile markets are discussed below :

1) Define your goals and understand your risk bearing capital

Increased volatility indicates that there is a price rise or fall at higher than average rate of speed and your risk bearing capability should be high to earn well here. Majority of traders here believe that volatile market is a good time to play safe.However while trading under such market conditions the very first step is to ensure that:

  • You feel comfortable to trade in market when it is highly volatile.

  • Your main objective of trading is to earn maximum profit.

  • You ave realized the fact that you may loose significant amount of capital and you are okay with it.

Once you ensure that you are ready to trade here the next thing you should do is carefully understand risk management techniques which you have as a part of your trading plan.

2) Use strategy which is in accordance to volatile market

The final step to be performed here is choose a trading strategy that can help you to take advantage in highly price volatile market with minimum risk.As not all strategies gives same results under different market conditions wisely pick your strategy.Following are some points which may be considered to decide trading strategy:

  • Focus on stocks which are trending in primary market direction.

  • Watch breakouts and consider short term trading strategies.

Traders usually crave for price movements as it offers them good opportunity to make profit but sometimes they accelerate more to what they used to be. Therefore to win by earning good returns here it is must that you plan everything in advance. You can also hire financial advisory services provider to assist you with useful trading tips and guide with optimum trading strategy. Market offers good opportunities to traders using which you can earn well , it is on you how you use them to make them work in your favor. Best way is to always learn market updates timely and never trade beyond your risk bearing capability.

How a trader can earn profitable returns while trading in precious metals like gold and silver ?

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Mostly people believe that trading in commodities like gold is very difficult but the truth is that gold does not show movements like other stocks and commodities and traders need to keep several points in mind to become successful trader here. Mcx tips on gold, silver can also be referred to be on the safer side and ensure your good earnings. Gold can serve as most essential part of your portfolio in today’s volatile economy, however people do not realize this fact and fears to trade here.

Few tips for traders to earn good returns by trading in metals like gold, silver are discussed below :

1) Keep trading position small. When you have high chances of being correct then you can go for large position. Along with this be attentive to market updates as many markets have cyclical nature and these cycles can be of great help for short and long term trades.

2) Rely on usage of well proven indicators like stochastic indicators. Others may be useful as will but first examine them well and then decide to make decision while trading using them.

3) Wait for confirmations before taking any action. It is good if you wait for breakouts/breakdowns confirmation.In-case of precious metals it is advised to wait for three consecutive price below/above the critical price level before considering breakouts/breakdowns confirm and meaningful.

4) Study different ratios, not all but those who have contributed to provide useful signals for gold and are also important because of some fundamental factors. Also you can learn about time frames other than one which you focusing.

5) Constantly lookout for any abnormal situations and if you identify something odd then understand the reason behind it and check if happened preciously as well and if you find that it happened previously then further study its impacts.

6) Monitor sentiments of other gold traders and investors. If most of them are bullish then it may lead to increase in prices of gold. Such a situation is good to go for selling by exiting long position and entering in short position.

These are few suggestions which can be helpful for earning well from commodity market. Apart from this always make trading decisions on the basis of facts and never follow other traders path blindly until you have a good reason to do so.Trading in commodity market offers several benefits to traders.Though trading is done here in a similar manner like stock market but every market has its own requirements. Therefore gain sufficient knowledge about market before beginning to trade. Financial advisory services providers gives useful suggestions on mcx trading tips and more after understanding markets behavior. Such suggestions can be followed to trade in an efficient manner. Every individual trader of commodity market has its own trading goals and by following a disciplined trading practice those goals can be achieved.

What is meant by futures and options contracts and difference between them ?

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Futures contracts

Futures contracts are basically an agreement between two parties i.e a buyer and a seller where both the parties agrees to buy/sell a particular asset at pre decided price and time.There are times when a buyer does not have money to buy a particular asset at present but he has the potential to buy it at some future date so he can do so buy buying a future contract of that asset. All futures contracts are standardized and therefore they are traded over the exchange freely without having any counter party risk.For better results experts suggested futures trading tips, mcx tips are also followed by traders and investors. Every contract has its own specifications which both the parties has to fulfill. Participants of futures contracts may not know each other in most of the cases.

Trading in assets like stocks, indices, currency pairs, commodities can be done using this contract. Among all mostly traders prefer to trade in futures contracts of stocks and commodities.Trading using these contracts is done to hedge against future price risk mostly. In nutshell traders try to take benefit from price difference between cash and future market. As they buy at low price in cash market and then sell it at a high price in future market.

Options contracts

An option is a type of security traders can buy/sell at pre decided price over a specified time period. To enter in any option contract initially a premium amount has to be paid which varies for different contracts. Here there is no obligation which has to be fulfilled.

Options are of two types primarily:

Call Option: It issues buyer right but do not put any obligation to buy an asset at some particular date at pre decided price over a specified time period.

Put Option: It issues seller right but do not put any obligation to sell an asset at some particular date at pre decided price over a specified time period.

Few differences between options and futures are discussed below:

1) In futures buyer and seller are obliged to fulfill the contract specifications but this is not the case with options contracts. There is not obligation on buyer/seller.

2) Margin money is higher in futures contracts.

3) Participants of futures are speculators and arbitrageurs and in options are hedgers.

4) In futures loss and profit is unlimited. In case of options contracts loss if in-case then only premium amount which has paid will be the loss.

Futures and options offers several benefits to traders but do not began to trade in this market blindly. Firstly gain sufficient knowledge about market and understand its different terminologies as trading in options is bit difficult . Use of financial advisory services is also a way to ensure your good earning from market. Such service providers consists of team of qualified market experts with very good market knowledge and recommends trading tips after carefully understanding market conditions.

What are the different types of stock trading orders ?

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Indian stock market has become most attractive source of investment and trading because of its outstanding performance in past years. If wisely invested some really good returns can be earned on invested capital here. To perform better in market it is required to have good market knowledge and familiarity with its terminologies. Experts suggestions on mcx tips , trading tips are also referred by traders and investors to ensure their good earnings from the market. Ample opportunities are offered by market to earn well, it is on traders how they make use of them.

To place your buy/sell order a set of instruction has to be given by trader which is popularly know as stock trading order. Following are its some types:

1) Market orders

Market orders are the most simplest form of order types. It simply states that a trade order should be executed at best available price in market. The biggest advantage with this is its speed .As when market is liquid for some stock the market order gets executed at nearest ask price. Depending on lot size this order type may not get executed at the exact price which was expected.

2) Limit orders

A order type which states a specific price to buy/sell is known as limit order. Depending upon market conditions this order may or may not gets executed but if executed then it will be at chosen price or better than it. Using this order type a trader actually specify the maximum amount he is willing to pay to buy or the minimum he is willing to sell at. The advantage here is that you have complete control on price at which which you want order to get executed.

3) Stop loss orders

Stop loss orders are quite similar to market orders as here also trader wants to buy/sell at best possible price with a difference that here that order gets executed only if the market reaches some specific price.

It can be said that this order is combination of both market and limit orders. As here a conditional request is stated to execute order at best possible price once price crosses some predetermined level but withing predetermined limit price.

4) Minimum fill orders

This order type simply states a conditional request to execute order only when minimum number of shares are available not before that. Different trading strategies demand for different order types and as per strategy need a trader decides its order type.

5) Market if touched orders

With market if touched order type is placed below current price in-case of buy order and above current price in case of sell order. For example shares of company XYZ is having current market prices as Rs 100/share then buy order will be placed at a price level which is less than Rs100.

These are few order types however there are some more. Traders can trade using any order type in stock market depending on their trading goals. Financial advisory services provider can be hired if you lack in sufficient market knowledge to give suggestions on trading tips for different segments of market. As such service providers perform good research work to deliver you with such tips.

Some tips for day traders to improve their trading experience and earn good returns.

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Intraday trading is a form of trading in which a trader has to square off its position on the same trading day i.e position can not be hold for more than one trading day. Day traders are usually the ones who has to face wild movements in a stock first and this affect their efficiency of making a wise trading decision. By following good trading practices and experts suggestions on day trading tips, mcx tips and more helps traders to deal with markets volatile nature in a better way and earn desired returns.

Trading on intraday basis can be really profitable if you learn when is the good time to take the right position in the market. Few more tips for day traders are discussed below :

1) Be neutral to price movements

Most of the successful day traders look at their stock movements as per the prevailing trend not on the basis of their expectations. Beginners or unskilled traders look for reason to hold their position in market whereas successful traders have clear definition when to enter and exit from market and they hardly makes any changes in their trading strategy while they are trading. Having false expectation from market may bring you negative returns.

2) Be attentive to market updates and never miss any good market opportunity

Market offers ample opportunities to traders for earning good returns and sometimes it offers same opportunity at different times. New traders usually takes time to identify them and take right decision. Be extra attentive to market updates and learn how to make opportunities work in your favor. Day traders must be confident enough to make right trading decision and pick stocks at the right time.

3) Have good patience

Patience is key to success in every business and so it is for day trading as well. Unskilled traders start trading here without having any prior market knowledge . Ideally they should learn about market and trade on paper first. No trading strategy gives same result everyday. Sometimes you need to wait for long time for good market opportunity before you take your position in market. Be patient enough to take position at the right time. Making decisions in hurry may not bring profitable returns at the end of the day.

4) Do not intermix trading with investing

Investing and trading are very different from each other. Generally investment is done for long term and in day trading position has to be squared of same day. A wise trader always keep stock trading and investment separate. Also they have separate positions as well as stocks for investment and trading purpose. To become a successful trader it is required to understand this concept.

Day trading can not help you become rich overnight also it is most risky form of trading. Financial advisory services provider can be consulted if you lack in sufficient market knowledge. Become familiar with market terminologies and restrict yourself to follow disciplined trading practice always. Following a good trading path is helpful to perform well on long term basis.

What are different risk which are faced by traders while trading in shares?

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Risk is an inherent part of investing and it can not eliminated or ignored completely. Generally it is believed traders need to take high risk in order to earn high returns.Those who are not willing to take more risk have relatively small chance of earning high returns. Traders should never get involved in to risk which is beyond their capacity. To be on the safer side experts mcx tips and more can be referred while trading. Not every investment decision gives expected results, diversification helps in managing risk in a better way.

There are some risks which traders should be aware of while trading in certain asset classes. Following are some risk which are faced by stock market traders :

1) Volatility risk

Stock market is of highly volatile nature and shares prices can be extremely volatile at times. Traders and investors should be aware of the fact that share prices may fluctuate even in short periods. Keeping a good track record of market updates helps to sustain in market on long term basis.

2) Capital loss

When a company does not perform well its shares prices are most likely to fall below the price which you have paid or even zero sometimes.Traders who are trading in shares of such companies may face huge loss because of under-performance of its shares.

3) Timing risk

Timing at which you buy or sell a particular stock matters a lot because not all sectors of market will follow the similar price cycles. Therefore it is important to understand how different companies perform in different phases of business cycle. A good understanding of such cycle helps to minimize the impact of timing risk.

4) Market risk

Market keeps on fluctuating and sometimes it is really difficult to predict the market in the right direction. And these frequent market fluctuations shows its impacts on prices of different stocks. Market is risk is often influenced by external factors like changes in interest rate, economic conditions, government rules and regulations.

5) Risk with particular stock

Traders face this risk when a price of particular stock declines because of some negative news. This downfall is followed by weak trading statements. It is always recommended to study about company’s performance first before making a decision of trading in its stocks.

These are just few types of risk which traders of stock market face. Individual stocks have their own risk associated with them as well. There are various ways using which risk can be managed in better way like: use of financial advisory services , stop loss orders, portfolio diversification.Traders should always carefully identify their risk bearing capability and trade according to it. By following a right trading path and disciplined trading practices traders can earn good returns for themselves.