What is Share and Share Market?
What is share?
At the board level there are 3 types of companies.
Proprietor ship - company has only one owner
Private limited company - company having board of directors (multiple owners)
Public limited - This type of companies ownership is disturbed to all public in the form of shares and such companies will be listed on stock exchanges for public to buy the shares.
The public limited companies have shares. A person buying single share of a company holds an ownership in that Company.
For example - If you buy a share of any company then you are the owner of that company. The ownership depends on the number of shares you hold or the percentage of shares you hold. A founder, chairman or board of directors, institutional investors, hold majority of the shares of the Company so they are considered as major stake holders.Read this before you continue -
For some people it takes weeks and months and even years to decide whether to enter into Share market or not because of following reasons.
i) The share market is considered to be only for brokers and highly experienced professional so common people stays away from it.
ii) Still most of the Indians consider the Share market is risky and money loser business/job.
iii) Lack of awareness due to absence of advertisement.
iv) Lack of training and guidance.
v) The last but not least that people think that share market requires lot of capital to invest or to trade.
Likewise there are lot of rumours which kept most of the people away from the Share market. But the truth is that like any other business/job, the share market also requires knowledge and experience.
As every field requires knowledge and experience to get success likewise share market also required knowledge to earn money.
In our various learning sections, we have explained all that requires to become a trader and investor so that any person can earn live hood in the share market.
Why people fail in share market
Lot of people enter share market to earn fast money and to do day trading based on tips. This will not work and people will loose their money. If you are looking to make fast money based on any tips then share market is not for you at all if you want to try then makeup your mind to loose your hard earned money.
Share market is for those who want to learn and then earn. Day trading required months and even years of experience to start earning money. Day trading is risky for new comers.3. What is Investing and who is the Investor?
Basically there are two types of people in share market - Investor and Trader
Who is Investor?
A person who invests his/her money in company's performance to get good returns from few months to few years is called as Investor.
Investor buys shares of the company after analyzing the company and its business. This process is called as fundamental analysis. He then holds it for few years and sells it after the share prices moves up and provide good returns.
Facts about Investing/Investor
i) Investing doesn't require you to be in front of the market throughout the day. At the same time it is always advantageous to keep self updated with market happenings.
ii) As the investing doesn't require you to be in front of the system whole day, the investing can be considered as part time job or part time business.
iii) Investing can be done from few months to couple of years.
iv) Please note that "Our Indian History" shows that investing in share market for long years have always provided excellent returns compared to any other investment option. So people knowing this fact stay invested in share market for long term and get benefited. No any other investing method provides returns that can be matched with share market returns for long period.
Risk -
If you invest in companies without analysis and knowledge then it is risky. If you buy shares of the company having strong fundamentals and stay invested for 2 to 5 years then definitely it would provide excellent returns. It is risky to buy shares of the company without studying the company.
• Read this before continue
• What is Share and Share Market?
• What is Investing and who is Investor?
• What is Trading and who is Trader?
• What you want to do?
New comer to share market
The general term 'market' is the place where buying and selling takes place likewise Share market is the place where the buying and selling of shares take place.
Note - Now a days due to revolution of internet and computer the buying and selling of shares can be done from anywhere in the world with the help of computer and internet connection.
In India we have two major exchanges where trading takes place -National stock exchange (NSE) and Bombay Stock Exchange (BSE).
Some facts about share market
i) Share market can be considered as business or job, either part time or full time job.
ii) Its all about learning and experience.
iii) It requires consistency in learning and after spending few years in markets, this profession can be taken as part time.
iv) Requires full dedication
v) Don't misunderstand that Share market will make you lakhpati or crorepati in one night.
What Share market is not?
i) Overnight rich scheme or business.
ii) It is not a magic or quick money maker.
iii) It is not for seasonal earning but once experienced can make it seasonal activity.
iv) It is not for them who totally want to depend on tips.
4. What is Trading and who is the Trader?
The mean of trading is buying and selling and share trading means buying and selling of shares.
Who is the trader?
Trader who does buying and selling of shares is called as share trader.
ii) Trader do buying and selling of shares without concern of company's performance rather they study daily stock prices and its movement and adding some technical analysis to it.
iii) Trader is not interested to know how well the company is doing as he buys and sells the stock immediately once he get profits.
iv) Trader's are basically opportunity finder - Opportunity can be of any good news or bad news or any government declaration or any company's announcement, any opportunity that makes the movement in the share price interests traders and they take respective positions and make profit.
v) Traders keep themselves updated all the time and hence the trading has considered as full time business/job. They have to be infront of the system all the time at least during learning phase.
vi) Trader do very frequent buying and selling of shares on daily basis, weekly basis and on monthly basis and look for very small profits. Risks Involved -
Trading involves very high risk and it can wipe out all the money/capital.
So basically we advice, to first learn and do and if you get success in paper trading then go for real trading with money.
Please note -
Trading involves very high risk and hence provides high returns in small span of time.
We have posted various trading strategies, methods, techniques including stock picking patterns for all types of traders on home page.
Precaution for trading -
Trading requires lots of market knowledge and experience so we do not recommend trading for new comers.
We daily receive lots of email from new comers that they have made huge losses in trading. So we always recommend learning and then do paper trading practice and then finally starting trading with money and that also with very few amount.
5. What you want to do?
It is always advisable to plan and then act. Decide based on your availabilities whether you want to become investor, trader or both.
i) If you can spend entire day in front of the market and ready to take risk then trading can be selected because trading involves big risk and can wipe out all your money. For new comers it is required to spend 6 to 8 hours in front of market. So while trading, investing can also be done because investing is not all day activity.
ii) Investment - If you can't provide more than 6 to 8 hours in a day then better you prefer investing to start with and till you get feel of the market. So if you are working professional and want to have part time job or side business then investing in shares would be preferred.
So selection of method to enter into share market is totally depends on you and your ability to provide time and ready to take level of risk.
Investing has low risk and trading has high risk.
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