Purpose of this article :
Understand basics of Online Stock Market Trading in India.
Provide detail about popular online stock trading companies in India.
Compare and discuss about stock trading websites, their products and services.
Brief Introduction - Online Stock Market Trading
1.Stock Exchange
Stocks (Shares, equity) are traded in stock exchange. India has two big stock exchanges (Bombay Stock Exchange - BSE and National Stock Exchange - NSE) and few small exchanges like Jaipur Stock Exchange etc. Click here to see the list of Stock Exchanges in India
Investor can trade stocks in any of the stock exchange in India.
2.Stock Broker
Investor requires a Stock Broker to buy and sell shares in stock exchanges (BSE, NSE etc.). Stock Broker are registered member of stock exchange. A stock broker can register to one or more stock exchanges.
Only stock brokers can directly buy and sell shares in Stock Market. An investor must contact a stock broker to trade stocks. Broker charge commissions (brokerages) for their service. Brokerage is usually a percent of total amount of trade and varies from broker to broker.
3.Stock Trading
Traditionally stock trading is done through stock brokers, personally or through telephones. As number of people trading in stock market increase enormously in last few years, some issues like location constrains, busy phone lines, miss communication etc start growing in stock broker offices. Information technology (Stock Market Software) helps stock brokers in solving these problems with Online Stock Trading.
Online Stock Market Trading is an internet based stock trading facility. Investor can trade shares through a website without any manual intervention from Stock Broker.
In this case these Online Stock Trading companies are stock broker for the investor . They are registered with one or more Stock Exchanges. Mostly Online Trading Websites in India trades in BSE and NSE.
There are two different type of trading environments available for online equity trading.
1.Installable software based Stock Trading Terminals
These trading environment requires software to be installed on investors computer. These software are provided by the stock broker. These softwares require high speed internet connection. This kind of trading terminals are used by high volume intra day equity traders.
Advantages:
Orders directly send to stock exchanges rather then stock broker. This makes order execution very fast.
It provides almost each and every information which is required to a trader on a single screen including stock market charts, live data, alerts, stock market news etc.
Disadvantages:
Location constrain - You cannot trade if you are not on the computer where you have installed trading terminal software.
It requires high speed internet connection.
These trading terminals are not easily available for low volumn share traders.
2. Web (Internet) based trading application
These kind of trading environment doesn't require any additional software installation. They are like other internet websites which investor can access from around the world through normal internet connection.
Below are few advantages and disadvantages of Online Stock Market Trading :-
Advantages of Online Stock Trading (Website based):
Real time stock trading without calling or visiting broker's office.
Display real time market watch, historical datas, graphs etc.
Investment in IPOs, Mutual Funds and Bonds.
Check the trading history; demat account balance and bank account balance at any time.
Provide online tools like market watch, graphs and recommendations to do analysis of stocks.
Place offline orders for buying or selling stocks.
Set alert to inform you certain activity on the stock through email or sms.
Customer service through Email or Chat.
Secure transactions.
Disadvantages of Online Stock Trading (Website based):
Website performance - sometime the website is too slow or not enough user friendly.
Little long learning curve especially for people who doesn't know much about computer and internet.
Brokerages are little high.
Below is the detail comparison of major Online Stock Market Trading websites in India. This comparison is to help investor to take calculated decision while searching for new trading portal.
1. ICICIDirect
2. Sharekhan
3. Indiabulls
4. 5Paisa
5. Motilal Oswal Securities
6. HDFC Securities
7. Reliance Money
8. IDBIPaisaBuilder
9. Religare
10. Geojit
11. Networth Stock Broking
12. Kotak Securities
13. UTI Securities Ltd
14. Angel Trade
Friday, July 17, 2009
Stock Trading Strategy
The point of trading is to turn a profit, so why put money in a stock that is not moving? Doing so would mean risk without reward. Furthermore, an open position showing a loss should be cut immediately because small losses are the KEY. At TheStockBandit.com, our objective is to expect profits that outweigh expected losses by at least a 3:1 ratio. Losses are a part of the game, so you must respect them and keep them small. Therefore, only get in stocks on the move with the intention to ride them into profits and exit upon the loss of momentum. It is at this point in the trade that we TAKE THE MONEY AND RUN!!
This strategy is best achieved by buying stocks that are breaking out of tight consolidations on an expansion in volume. This type of move in a stock tells us that the previous area of indecision (consolidation or trading range) has been resolved to the upside and money is flowing into the stock (volume expansion). Volume is the fuel that pushes the stock upward once it begins to move. A lack of volume is a lack of fuel, and the move may be short-lived. Be wary of breakout (or breakdown) moves on light volume as they are prone to failure.
Be in no hurry to put on trades. Trades placed out of boredom lead to bad habits and poor results in the long run. This leads to a loss of trading confidence, which is even more damaging than losing dollars!
Over time (weeks, months, years), be absolutely sure to keep your down days and weeks as small as possible. Growing your account happens when you stay in winners while they run, and cut losers at the first sign of negativity. Big winners are not for offsetting big losers. Wealth comes from big winners, so keep the losers small.
Trading Strategy - What is Your Timeframe?
First of all, decide your timeframe for trading. This is important because it not only determines position sizing, but also where to get out of a trade. Stock picks from the Bandit Broadcast are selected because they are set up for initial moves which are ideal for day trading, as well as longer term moves which are ideal for swing trading. Deciding which approach works for you will help you to determine which exit strategy fits your trading plan best.
Regardless of which timeframe you trade, the key is to keep your risk profile for every trade in check. The stocks listed in the Bandit Broadcast stock newsletter are poised for at least an initial move which is ideal for day trading, as well as for an extended move for swing trading.
The following links will take you to the pages which will outline a specific Stock Trading Strategy to fit your timeframe.
Swing Trading Strategy
If your trade timeframe supports swing trading, here is the strategy we implement for our own trades. This may not be the exact way you wish to swing trade, but it is intended as a guide to help you determine a trading strategy that suits not only your timeframe, but also your personality as a trader. If your timeframe is shorter, please see the day trading strategy page for more information.
Swing Trading Strategy:
When swing trading, your position size will usually be smaller than when day trading due to the fact that you are looking for a larger move. Your stop loss orders should be placed wider than when day trading for this reason. Naturally, your profit targets are farther away, so patience is a necessity.
Stocks often gap, so here are some guidelines for swing trading:
• If a stock gaps 1-2%, enter 1/2 of the intended position size and monitor the stock's behavior before adding to the position.
• If a stock gaps 2-3%, only enter 1/4 of the intended position size.
• If a stock gaps over 3%, it may be best to pass on the trade entirely, as the risk/reward profile of the trade is no longer the same.
Here are a few rules of thumb to help determine exits when swing trading:
• If the prior day's low is taken out on the breakout day (or high for shorts), exit the trade.
• Once a trade is held overnight, place a stop-loss order no further away than below the recent consolidation area, as a move beneath it would signal a failure.
• Once a trade is profitable by at least 10%, never give back more than half of the open profit. This helps to avoid the frustration of letting winning trades turn into losing trades.
• Once a trade is profitable by at least 5%, move the stop-loss order to breakeven on a closing basis.
• Partial buys and sells can be very helpful. If a stock breaks out in a sluggish fashion, consider entering only a partial position. If a trade is exhibiting little follow-through after the breakout, decrease the position size.
• Always monitor the health of the overall market, and the health of your positions. When things aren't acting right, either lighten up or go to cash entirely to preserve capital. It's easy to get back in!
These are some general guidelines for any trader with a swing trading strategy to determine exits that fit their timeframe, and are intended for educational purposes as you seek to define a swing trading strategy that suits your needs.
This strategy is best achieved by buying stocks that are breaking out of tight consolidations on an expansion in volume. This type of move in a stock tells us that the previous area of indecision (consolidation or trading range) has been resolved to the upside and money is flowing into the stock (volume expansion). Volume is the fuel that pushes the stock upward once it begins to move. A lack of volume is a lack of fuel, and the move may be short-lived. Be wary of breakout (or breakdown) moves on light volume as they are prone to failure.
Be in no hurry to put on trades. Trades placed out of boredom lead to bad habits and poor results in the long run. This leads to a loss of trading confidence, which is even more damaging than losing dollars!
Over time (weeks, months, years), be absolutely sure to keep your down days and weeks as small as possible. Growing your account happens when you stay in winners while they run, and cut losers at the first sign of negativity. Big winners are not for offsetting big losers. Wealth comes from big winners, so keep the losers small.
Trading Strategy - What is Your Timeframe?
First of all, decide your timeframe for trading. This is important because it not only determines position sizing, but also where to get out of a trade. Stock picks from the Bandit Broadcast are selected because they are set up for initial moves which are ideal for day trading, as well as longer term moves which are ideal for swing trading. Deciding which approach works for you will help you to determine which exit strategy fits your trading plan best.
Regardless of which timeframe you trade, the key is to keep your risk profile for every trade in check. The stocks listed in the Bandit Broadcast stock newsletter are poised for at least an initial move which is ideal for day trading, as well as for an extended move for swing trading.
The following links will take you to the pages which will outline a specific Stock Trading Strategy to fit your timeframe.
Swing Trading Strategy
If your trade timeframe supports swing trading, here is the strategy we implement for our own trades. This may not be the exact way you wish to swing trade, but it is intended as a guide to help you determine a trading strategy that suits not only your timeframe, but also your personality as a trader. If your timeframe is shorter, please see the day trading strategy page for more information.
Swing Trading Strategy:
When swing trading, your position size will usually be smaller than when day trading due to the fact that you are looking for a larger move. Your stop loss orders should be placed wider than when day trading for this reason. Naturally, your profit targets are farther away, so patience is a necessity.
Stocks often gap, so here are some guidelines for swing trading:
• If a stock gaps 1-2%, enter 1/2 of the intended position size and monitor the stock's behavior before adding to the position.
• If a stock gaps 2-3%, only enter 1/4 of the intended position size.
• If a stock gaps over 3%, it may be best to pass on the trade entirely, as the risk/reward profile of the trade is no longer the same.
Here are a few rules of thumb to help determine exits when swing trading:
• If the prior day's low is taken out on the breakout day (or high for shorts), exit the trade.
• Once a trade is held overnight, place a stop-loss order no further away than below the recent consolidation area, as a move beneath it would signal a failure.
• Once a trade is profitable by at least 10%, never give back more than half of the open profit. This helps to avoid the frustration of letting winning trades turn into losing trades.
• Once a trade is profitable by at least 5%, move the stop-loss order to breakeven on a closing basis.
• Partial buys and sells can be very helpful. If a stock breaks out in a sluggish fashion, consider entering only a partial position. If a trade is exhibiting little follow-through after the breakout, decrease the position size.
• Always monitor the health of the overall market, and the health of your positions. When things aren't acting right, either lighten up or go to cash entirely to preserve capital. It's easy to get back in!
These are some general guidelines for any trader with a swing trading strategy to determine exits that fit their timeframe, and are intended for educational purposes as you seek to define a swing trading strategy that suits your needs.
Day Trading
Day Trading Strategy
If you are a day trader, your position size is likely larger due to the fact you are looking for a smaller move with your short timeframe. Keeping a tight stop is extremely important when trading larger size, as a day trading strategy gives stocks multiple opportunities to work. For day trading, the strategy is rather simple:
• Always keep your profit objective at least 3 times greater than what you are willing to risk.
• Allow no more than a 1% move against you from your entry point. Ideally, you are in the trade beyond the trend line and out of the trade below it. You can always get back into the trade if the stock returns to the buy point.
• If a stock gaps beyond a technical trigger price, the original trade plan is negated for a day trade so a new plan should be made.
• If the futures (Nasdaq and S&P e-minis) make an intermediate lower high intraday (or higher low when trading the short side), exit half of your position. This implies a weakening market and can make it tougher for open positions to continue working.
• If your stock hits a new low for the day (long trades) or new high for the day if you are short, exit the position. A day trade is intended for initial moves, so there is no purpose in widening stops to accommodate a stock moving in the wrong direction. Get out if the stock breaks a low (or high if short) as you can reenter the trade if it triggers again.
• Once momentum fades and buyers are thinning out, take your profit. This can be done by carefully monitoring the intraday chart and the time & sales window for fading momentum.
Our methods
The only way to win the stock market game is to buy stocks when other people are selling and to sell stocks when other people are buying.
Here, you can find new short-term trading strategies to play against the crowd. We are trying to buy or sell stocks one day before the other people do.
Based on the same list but stock selection method is different. The number of trades is less than for basic strategy but return per trade is larger. Quarterly return of this strategy can be lower than for the basic strategy because of smaller number of trades but risk/return ratio is smaller.
Opposite to the Basic Strategy. Based of the list of potentially bearish stocks. A trader holds stock 2 days.
Using Basic and Sell-Short strategies simultaneously.
Based on a special list of bullish stocks. To buy or sell stocks one can use limit or market orders which can be placed before the market opening.
If you are a day trader, your position size is likely larger due to the fact you are looking for a smaller move with your short timeframe. Keeping a tight stop is extremely important when trading larger size, as a day trading strategy gives stocks multiple opportunities to work. For day trading, the strategy is rather simple:
• Always keep your profit objective at least 3 times greater than what you are willing to risk.
• Allow no more than a 1% move against you from your entry point. Ideally, you are in the trade beyond the trend line and out of the trade below it. You can always get back into the trade if the stock returns to the buy point.
• If a stock gaps beyond a technical trigger price, the original trade plan is negated for a day trade so a new plan should be made.
• If the futures (Nasdaq and S&P e-minis) make an intermediate lower high intraday (or higher low when trading the short side), exit half of your position. This implies a weakening market and can make it tougher for open positions to continue working.
• If your stock hits a new low for the day (long trades) or new high for the day if you are short, exit the position. A day trade is intended for initial moves, so there is no purpose in widening stops to accommodate a stock moving in the wrong direction. Get out if the stock breaks a low (or high if short) as you can reenter the trade if it triggers again.
• Once momentum fades and buyers are thinning out, take your profit. This can be done by carefully monitoring the intraday chart and the time & sales window for fading momentum.
Our methods
The only way to win the stock market game is to buy stocks when other people are selling and to sell stocks when other people are buying.
Here, you can find new short-term trading strategies to play against the crowd. We are trying to buy or sell stocks one day before the other people do.
Based on the same list but stock selection method is different. The number of trades is less than for basic strategy but return per trade is larger. Quarterly return of this strategy can be lower than for the basic strategy because of smaller number of trades but risk/return ratio is smaller.
Opposite to the Basic Strategy. Based of the list of potentially bearish stocks. A trader holds stock 2 days.
Using Basic and Sell-Short strategies simultaneously.
Based on a special list of bullish stocks. To buy or sell stocks one can use limit or market orders which can be placed before the market opening.
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