Trading is generally done either in terms of swing trading i.e. for 1-2 weeks time period with an objective of making atleast 5-8% returns or more. Intraday trading is entering and exiting the stock on the same day to make profit of 1-3% a day.
Investing is buying a stock and holding atleast for a period of more than a year to make returns of atleast 30 or if you identify and hold fundamentally good stocks for a longer period of time, then CAGR of 24-30% over a period of 3-5 years is possible.
What is Intraday Trading and How Does It Work?
- Intraday trading means you will either take a Buy or a Short position and square up your position by the end of the same day.
- Intraday trading is tough as almost 90% of the traders lose money due to market volatility or even in a sideways market.
- To consistently make profits in intraday trading.
- Understand candlestick charts and price action strategies.
- Check Daily charts of a stock/index to understand trend and use indicators like RSI, Stochastic oscillator and Bollinger bands to understand whether markets are overbought or oversold.
- Depending on whether the stock or index is overbought or oversold, Short or Buy with a stop loss of a strong resistance or support respectively.
- Exit with smaller but more consistent profits.
- Trade less but trade better.
What is Technical Analysis in the Share Market?
Technical analysis is the study of price action through charts. Through candlestick charts, momentum indicators and forecasting tools like Fibonacci projection and retracement, we can identify a particular stock, index, commodity, currency or Cryptocurrency trend. Once we have identified the trend based on charts, we can accordingly take a Buy/Short position and benefit both from a long and shorter term perspective.
What is Fundamental Analysis and Why Is It Important?
- Fundamental analysis is analyzing a company by going through its financial performance through Profit and Loss Statements, Balance Sheet, Cash flow analysis to gauge liquidity position and perform a detailed peer group comparison through Ratio analysis to identify the Top 2 stocks in a particular sector.
- Analyze valuation ratios like PE ratio, Price to Book Value, Market Cap to Sales to identify undervalued or even overvalued stocks or indices.
Fundamental analysis is very important as it helps identify the right stocks to buy at at the right price based on Valuation parameters from a long term perspective to enjoy consistently good returns over a period of 3-5 or even 10 years.
How to Pick the Right Stock for Investment?
- Analyze Profit and Loss statement and CAGR Sales & CAGR Profit growth over the last 3-5-10 years to understand overall business performance.
- Analyze Balance Sheet ratios like Debt to Equity, ROE, ROCE, Price to Book Value to gauge Balance Sheet strength.
- Analyze Cash flow for understanding Capex and liquidity position.
- Analyze valuation ratios like PE ratio to identify best time to BUY or SELL
What is an IPO and How to Apply for One?
- An IPO is an Initial Public Offer made by a public limited company to get listed on either or both BSE & NSE by raising funds from the public which includes FIIs, DIIs, HNIs and the retail i.e. general public.
- One can apply for an IPO through one’s broking account through the broker link and make the payment to apply for an IPO after thorough research through UPI payment as well.