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Key things to know about Stock Trading

Stock Trading is the practice of buying and selling securities on an exchange to generate a profit. This activity can be done by individual investors or by professional traders. It has become increasingly popular as more people seek to grow their wealth through investments. So, here are some key things to know about stock trading:

  1. Basic terms

Before delving into Stock Trading, understand some of the key terms involved. A stock is a share in the ownership of a company, and it can be bought and sold on an exchange. For example, the company Zomato allows you to buy their shares once you review the Zomato Share price. When a company issues stock, it is known as an initial public offering.
The price of a stock is determined by supply and demand and is influenced by various factors such as earnings reports, economic news, and market trends. When you buy a stock, you are buying a piece of the company, and when you sell a stock, you are selling your ownership in the company.

  1. Risks and rewards

Stock Trading can be both rewarding and risky. On one hand, investing in the Stock Market offers more significant and higher returns than other investments. On the other hand, there is always a risk that you could lose money if the value of the stock declines. It is important to understand the risks involved in Stock Trading and to develop a suitable strategy.

  1. Types of stocks

There are two main stocks: common and preferred stocks. Common stock is a basic stock. It highlights ownership in a company. Holders of common stock have voting rights and are entitled to a share of the company's profits in the form of dividends. Preferred stock, however, does not provide voting rights. It offers a fixed dividend payment.

  1. Types of orders

When placing an order to buy or sell a stock, there are several orders you can use. A market order is an order which allows you to buy or sell a stock at the present market price. A limit order is an order to buy or sell a stock at a specific price or better. A stop order is an order to buy or sell a stock once it reaches a certain price, which is known as the stop price.

  1. Technical analysis

It is a method in Stock Trading wherein you evaluate a company's stock price and market trends based on charts and other graphical representations of data. This involves assessing patterns, trends, and indicators to determine when to buy or sell a stock.

  1. Fundamental analysis

It is a method of evaluating a company's financial health and potential for growth. This involves analysing financial statements, earnings reports, and other data to determine the company's value and potential for future success.