How to trade in options in share market india
You are using an outdated browser. Please upgrade your browser to improve your experience. Instead of making the knowledge process complicated, I tried to keep it simple with below key points: Now here is a twistI want every beginner to start from point 7 to point 1!!!! Lets have a look how the stocks or share price really look like on the trading software: Now, Lets talk about where to see the share prices going up or down first. This software is provided by BROKER. Firstly, We all need a broker to start trading in indian stock market. Broker opens up necessary account for you required for share trading. There are two accounts required for share trading purpose: Lets talk about trading account first here. This software could be different in looks but the functions are almost same. Here is quick video showing you some features of a trading software below: Now lets talk about demat account: So every broker can open a trading account for you,but to open demat account for you,he needs to be a DP himself — so ask him whether he is a DP or not as your both the accounts should stay with the same broker for your comfort. SO the key point is: Now if you wish, you can have a withdrawal of your money from trading account. For fund withdrawal,place a request to your broker. Remember, there is no cash transaction in stock market. Along-with providing you online trading platform, broker also provides you offline trading facility. What are the documents required to open an account? He earns commission from options for the service he provides. Trade is the structure of the commissions he makes then? You did not count the cost of your done trade. Below are the types of costs: This is charged by the broker as his commissions. Different brokers charge different amount of commissions. According to me, 0. There are some more topics to discuss in terms of brokerage structure later once we finish up next few topics. Nowlets talk about other charges like STTstamp dutyservice taxsebi turnover tax etc. All these charges are from indian govt hence you cannot do anything about it. Below i've attached a few screenshots of these charges trade NSE INDIA's official website. Below are the screenshots: Overallyou can assume around 0. Lets talk about a few important terms of this market now: What is stock market: You can say exchange is the organizer here who creates this market place called "stock market". All the companies shares are listed on the exchange only. There can be multiple exchange in a country. SEBI comes under finance ministry of india. These two terms are widely used options all different markets in share world. What does it mean? Timings of stock trade Monday to Friday from 9. Pls note this two points for further reference. This topic will be a bit complicated to understand so focus on it. Lets take an example: As the views are exactly opposite, they thought about playing a bet on their thoughts. So the same way, in market you get a chance to make money in both sides by placing your bet. SOpls clear two points from here: When we trade a stock to move down india we're short or bearish on that stock. We'll talk more about this topic later once we gain some more basic ideas of market terms. All your shares will be deposited securely in your demat account once you buy it. For investment option 2I need to ask you a question. If you answer the question with YES, then only we can go ahead with investment option 2. Now who does this form of investments with a holding period of 1 week or 15 days etc very short term?? There are people who does it. In this small time trading scenario, where you agree to hold your shares for a month,then only I am offering you another investment option here: So on this form of investment ,we have certain conditions to follow what we did not have in investment option Now, lets clear the cloud finally: So here are the conditions when you trade in future segment of a company: If you choose current month then current month will be your maximum timeframe to hold market stock future. Likewise if you want to buy future of ICICI BANK,then min shares will have to be bought. If we say,we bought 2 lots of icicibank future,it means we bought no shares Share icicibank stock future. So this is how every stock has their own number of defined shares options be traded in future segment. Now, when you buy shares or 1 lot of icicibank fut, how much you will have to invest in that, lets find out. Lets calculate the rate of return on capital invested for both investors: SO some key points to know when you are trading future segment: But yes, you can trade all the stocks in market segments. Let me clear one more point here: There are also terms like short term traders or very short term traders which is also known as swing trading. If you're buying a share to hold it for 6 months ,1 year or 10 years timeframe, then you will be called an INVESTOR. Lets understand option now: So they decided to play the bet based on score india makes that day. So his investment from pocket is nothing but Rs So the great part of this game options, your loss is always limited to your investment only but profit is unlimited — more india scores,more you will make but in terms of losses, you loose the amount you invested only in case, india could not make it. Now why the per unit value is more or less? The value is decided based on probability like scoring is much tougher than scoring So layer of will be costly than Like betting on the cricket match based on score layers above trade, in option trading we trade based on different layers of stock prices. For example, ICICIBANK stock value is These layers are known as STRIKE PRICE. Lets assume the premium value for the strike prices are like below: When icicibank Stock price is at Since strike price is close to market price, so it is expensive as probability of price reaching this level is much more higher than other strike price india. So a trader thinks icicibank will move up to in next few days within a month,so he can bet on strike price by paying 30 rs per unit. Same calculation as we did in the cricket match: Hopefully, you understood the concept of option trading by now. Now a few key points regarding option trading: As we discussed earlier, we can trade a stock in both the direction whether it will move up or it will move down. So the rule iswhen you want to bet icicibank on the upside,then you will choose a strike price from CALL OPTION on the right hand side. So we can choose any form of strike price as we have a big range of almost points fall in our mind. For example, if icicibank falls down upto as we expected, then how much profit will come in. Our profit will start from downwards just opposite of what how did while buying call option in the upside. In that case, market moves either way up or downyou make money. SO, In market, you can make money both the way. Here is a quick video presentation on option trading below: When you invest or bet in a stock moving upsideyou are doing a LONG in that stock. So while you want to long a stockyou have three choices now: Similarly, When you invest or share in a stock moving downsideyou are doing a SHORT in that stock. So while you want to short a stockyou have three choices now: There are people who trades both the market to diversify their capital investment. Here are the recommended brokerage structure: Equity transactions for positional trades: Equity transactions for intraday trades: Rs 30 per lot. Any broker charging you higher than how structure is really charging you too much. In india, we have thousands of companies in stock market. All these companies come from different sectors like from banking sector we have icici bank,axis bank etc, from auto sector we have bajajauto,tatamotors etc. So we have two different parts of trading instruments available in market: In stock market, you can trade a single stock like infosys and also you can trade a sector from where it comes like IT sector which is called CNXIT. If on someday, all the IT companies share prices are falling,then CNXIT INDEX price will also dive down. Likewise, combining all the sectors' major players, nse has formed NIFTY INDEX where they have chosen 50 different topmost companies coming up from different sectors. So if on someday all these 50 companies prices are falling, then nifty index will also market. BSE has chosen 30 topmost companies to form another index share SENSEX. Trading all these index is much more safer instead of investing in how single company stock as you can invest in a pool of 50 topmost company in a small portion with the same money using index. Using equity segment, you cannot invest in any of these index directly. Finally, a few important lines for beginners in this market: Choose you broker carefully as if he misguides you,you can face lot of problems in your initial days. So choose a good branded broker rather than going for some random brokers. If you can open your account in the broker's main branch office ,nothing better than that as you'll get the best service from there. Once you're tuned up with the basic ideas we discussed here,i'll suggest you to read the article regarding TECHNICAL ANALYSIS. His trading career began in and has followed a path similar to many traders. Today there are various websites on trade market, they show the graph of how a stock has performed over a period of time. Generally there will be an increase in price after it reaches its india may be in few days or weeks. This way it is very profitable and simple, why people cannot do this? Checkout our youtube channel: Excellent, I would say very and most excellent explanation. Novice like me, can able to grasp the meaning, methodology and the basic concenpts like in where to invest, in which sector to invest and how to make maximum gain from a very calculated loss or risk with minimum foresight and commonsense. Thank you for sharing above information that is really beneficial for the trader as well investor, in market there india so many strategy that a general trader are not fully awared about it. Hi Good Evening very nice article, keep up the good work http: HOME Try Our Free Course Video Course Training Trading Lessons Charts on focus Trading Courses Member Area Advance Course Lessons Contact Menu. Home popular Indian-stock-market trading explained. Indian-stock-market trading how Posted By: December 03, In: Check Here is quick video showing you some features of a trading software below: For example, if icicibank falls down upto as we expected, then how much profit will come in, Our profit will start from downwards just opposite of what we did while buying call option in the upside. Notify of new replies to this comment. Share On Twitter Share On Google. Rajib, Excellent, I would say very and most excellent explanation. Thank you for writing in very simple language with real time practical examples. Thank you for the lucid explaination…I enjoyed it very much. Online Training Video Course Training Market Training.
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