Types of Trading in Stock Market

 

There are so many options available in the market for doing investments and now days multiple startups are coming up with new investment options plans so that you can earn by taking advantage of these experts. There are following type of Trading methods available or offered by brokerage firm:-

1.       Margin Trading: -

This trading is bases upon the margin by your broker against the stocks you held and against deposited amount. Margin on stocks generally they offer depending upon the category of stocks you are holding in your portfolio. Against cash held they offer you 5-10 times limit for trading. In margin trading you have to buy and sell the stocks same day and that why it is also called as intraday trading.

 

This more method these days and people wants to become millionaire within short period of time. This type of trading is very risky trading and is always advisable to remain away from this method of trading. For attracting more customers into intraday trading brokerage firms even offer lower brokerages, Brokerages plans, more limit against stocks and free tips as well. By doing so brokers will get maximum brokerage as against the limit offered you will trade maximum throughout the day. In end you will realize that apart from loss you have paid substantial amount on paying brokerage and other related charges.

 

2.       BTST and STBT:-  

BTST means- Buy Today Sell tomorrow and STBT means- Sell today buy tomorrow. You can’t do STBT in cash market but you can do BTST. For BTST i.e. you can buy and carry stocks over and above the stocks you have withheld in your account. A margin is given by broker 3-4 times the stocks you held for buying and holding stocks for a particular period against which they will charge 24% interest on the same on pro-rata basis. By doing so you always buy more stocks then the available funds with you and you keep on paying the delayed payment charges apart from Delivery brokerage and other related charges. You will never ever going to get benefit from this service as you can’t predict the market and stocks with 100% accuracy.

 

On certain days you will find that your excess holding is in negative so will sell the other stock which is giving you profit and add more funds by arranging from stupid means such as taking personal loans and loan against Credit cards. So avoid this option as well as this make you addicted to the market.

 

3.       Future and Options:-

In futures and options you can buy and sell the share. There are few shares which are under F&O category and are offered by exchanges. In future and options a certain quantity of shares of a particular script are offered will be called as a lot, this lot you can buy with some margin amount in that case you are not required to pay the (no. of Shares X price of share ) full amount instead certain amount is required for purchasing the whole lot. It means that you can buy good quantity of shares with minimum payment. Now future and options will derive the future value of stock. Scripts trading in F&O are either at discount or premium against the cash segment rates.

 

These are very risky trades as your whole value may get wiped out in fractions of seconds. This attracts persons as you can buy good quantity of shares of script with minimum amount and minimum brokerage. It is always advisable to buy the shares within in your funds availability. As I will says that “These Future and options will destroy your future and with no options left”

 

Future and options are also offered on Nifty, Bank Nifty and various others things apart from scripts only. Futures and options will expire on last Thursday of a particular month.

 

4.       Cash Segment:-

This segment is for investors as you can buy and hold the stocks within your funds availability and hold for period as much as you can. You will be maximum brokerage this segment but you will be relaxed in this segment and not to worry about day to day market fluctuations due to various global factors. If you are long term investor means you are holding stocks more than 5 years then you will reap multi-times returns and paying brokerage will never going to hurt you. Brokers don’t like this segment as you trade well less and they will earn minimum from such investors. So they don’t much offerings to these types of customers, instead they will keep on calling the customers for more investments and to do the trading. Don’t fall in trap and keep patience to garner maximum returns.

 

Apart from brokerage you will be charged 15% tax in case of intraday trading if you are earning after intraday trading and you will be charged 10% tax in case you sell the share after 1 year.

 

In this article we are not discussing about Mutual funds which is the option for investments as for mutual funds you are not required to open any DEMAT account as required for buying and selling the stocks.

 

Other options for Trading available in the market:-

These mentioned segments are for stocks and stock related indexes. Apart from these trading 2segments you can also trade in commodities, Metals, Crude, Bullion and currency. All were traded in futures. Never try to become expert of all traits without knowledge of anyone. You can’t profit from share market you are not going to make any profit any other segment.