Know Basic Online Trading Concept
It is the total valuation of the company based on the current share price and the total number of outstanding stocks. For example, if a share is valued at Rs. 100 per share and there are one lakh shares held by public investors, then its market capitalization will be Rs.10, 00,000.
Bull and Bear markets
Often wondered why the terms ‘bull’ and ‘bear’ is used to describe markets. It is because of the defensive mechanism of these animals when they attack. A bull thrusts its opponent up in the air, while a bear swipes its paws down. In market terminology, if the market is in uptrend it is called a bull market and if it is in downtrend it is bear market.
Settlement is the procedure undertaken by Clearing Corporation of India. The trades are cleared to determine the obligations of counterparties to deliver funds/securities as per settlement schedule. Buyer/seller delivers funds/securities and receives securities/funds and acquires ownership over them.
In India, settlement happens in T+2 days, where ‘T’ is the day of transaction. Saturdays and Sundays are non-working days. So, if a transaction is done on Friday, it will be settled on Tuesday.
How to read stock quotes
Last Traded Price (LTP) : LTP is nothing but the last price at which a stock was traded.
Change: Dividing the difference between old and new closing price with the old closing price and multiplying it with 100 determines the percentage change. If the change is positive the stock is written in green, while red colour indicates fall in the stock price.
High/Low: It is a measure used by stock exchanges during high buy/sell volume of a certain stock to avoid panic among traders. Circuit high refers to a price level above which a trader cannot quote the selling price and circuit low is a price below which a trader cannot quote the buying price.
Volume: This indicates the total number of shares traded for the day. It is generally listed in hundreds.
Buy Quantity: It is the total number of shares available for purchase.
Total Sell Quantity: It is the total number of shares to be sold.
52-Week High/Low: This indicates the highest and lowest price the stock has hit in one year, i.e. 52-weeks. This helps investors understand the stock’s trading range over the time period.
Name and Ticker symbol: The name of the company along with its unique alphabetic name helps identifying the stock easily.
High/Low: Share prices keep fluctuating during the trading hours. It indicates the highest and the lowest price the stock has hit during the day
How your order is processed?
Financial instruments like stocks and derivatives are traded in the stock exchange. In India, all the market participants including companies issuing shares, the brokers conducting trades and the investors buying and selling are registered with SEBI.
First the company gets listed in the primary market through an IPO. On listing, the stocks are traded in the secondary market.
So what happens when you place an order?
Step1: The order is placed at a terminal.
Step2: The broker acts as an intermediary between (you) the investor and the exchange. Your order is sent to the exchange.
Step3: The exchange finds counterparty for your order after confirming details to avoid any default both in case of buyers and sellers.
Step4: The exchange then confirms to the broker on availability of counterparty.
Step5: The broker debits/credits your account and settlement takes place on T+2 days.