Hotoptions.com – Share market
Share market is one of the most complex working structures which are there in this world. Explaining the share market in simpler terms can prove to be a huge ask! Now through this article I would like to give a brief and comprehensive insight into the world of the stocks while keeping it simple. Now as the name suggests share market is a place where people buy and sell shares. The investors can only buy shares which are listed in a stock exchange of their respective countries. The prices of the shares are decided by various factors. Understanding these factors is the key for success in the share market. Share market mainly rides on the thinking or what can be technically put as the psychology of the investors. In a share market there are two conditions namely; a bull phase and a bear phase. A bull phase is a phase where the market is searing forward with the prices of the stocks going up and moving forward in a really fast pace which is often described as the ideal phase as in this phase an investor often witness an impressive growth in their stock portfolios. On the contrary the bear phase is the mirror image of the bull phase where almost all the shares would be witnessing a negative growth and people would suffer losses due to the reduction in the prices of the stocks in their respective portfolios. It is the anticipation of these phases that can enable an investor in reaping the profits of the share market. The profits of an investment is calculated by the simple formulae i.e., Selling price (Price at which the shares are sold) – Cost price(The price at which the shares are bought). Now that you got a small understanding of the working of the stock market let us learn about some commonly used strategies in investing.
Day trading is a method of investing in shares where the investor mostly buys and sells the shares during the same day itself. Day trading is one of the most risky forms of investment as the chances of experiencing risks are very high. Day trading can be done by either buying and selling them just like traditional investing which uses the fluctuations of the market or by investing through derivatives which is yet another major field of instruments which are technically advanced in nature. Derivatives include two major categories namely: Futures and options. Futures are forward contracts where an investor can enter into an agreement which involves a future date and price and which involves a future delivery of the shares. In futures the investor has an obligation to buy or sell the agreed volume of shares. Options are also forward contracts but unlike futures the investors don’t have the obligation but enjoys a right to buy or sell the agreed shares. Derivative is a huge field of study which involves a lot of factors. Derivatives are mainly used for the purpose of hedging.