For a trader, the primary knowledge of the product in which he trades is much required. The same rule applies to the traders who plan to trade in the stock market. This market offers huge opportunities to trade and earns good income in the form of profit but for that one needs to have sound information and knowledge about the market as well as movement in the prices of various shares. There are also some shares where one can see movement without a base and trading in such shares can be risky for an individual.
In this market, there are segments such as derivative and cash with options of futures and options as well as intraday and delivery trading. Each of these segments has different parameters and limits as well as risk and potential of profit making. The trader needs to know his requirement and chooses any of the options from the market. He also needs to see that there is the cost of brokerage associated with each of these segments and hence an account with the service provider who can go for the low brokerage in India can be of more help.
Intraday trading or delivery?
For the trader who wants regular and, fast money intraday is a better option. One needs to invest a limited capital and can earn a good amount in few hours also. However, there are also chances of trades going wrong, and hence one may have to suffer from loss as well. The trader who aims at long-term benefit may go for making a good portfolio where shares of blue-chip companies are bought and parked in demat account. Over a period when the prices rise, he can sell them and fetch a hefty profit. However, in this trading one needs to invest a good amount and also wait for a long period.
The intraday trading is the option where the trader can earn a good amount in limited hours. However, there is also a chance of losses, but it is also limited. The delivery based trading is the option with the help of which the trader can have a portfolio for the long term. He can earn the dividend from the companies or can earn a profit by selling the shares once the rates of the shares are increased. However, the brokerage rate is also a point that one needs to check.
The derivatives:
In the derivatives segment also there are futures and options in which one can trade. The trades in this segments need to be done with much care as there are no limits of profits and same applies to the loss as well. The amount involved in these trades are also huge high. Here there are contracts with expiry dates, and hence one can have time to have right decisions and book the profit. In case there is a negative trend also one needs to take action immediately. In such situation, one may have to square off the position even if it is loss else the system may do the same and one may have to suffer from a huge loss.