Share Trading

Share trading is carried out in the share market, which is a market for securities. The organized issuing and trading of shares is known as share trading. This is either through exchanges or over-the-counter in physical or electronic form. Through trading of shares, capital from investors is channelized to the business concerns and this in turn helps the business houses to use the money invested to expand and develop the business.
The stock exchanges are organized markets for trading in stocks, bonds and other equivalents. The exchange is the counter-party to both the buyers and sellers in case of any defaults. The over-the-counter (OTC) are not centralized exchanges and trading takes place here through a network of dealers. The share market can be divided into two parts.

The Primary Market deals in the new issuance of securities to the investors. In the Secondary Market, the investor has to buy the securities from other participants of the same issuing corporation. There are two types of stocks traded in the share market. The common stocks confer ownership rights on the holders of those stocks.

The companies provide dividends to the investors in case of profits accruing. The preferred stocks also give ownership rights to their holders. The holders of these kinds of stocks have the advantage of receiving privileges from the companies in preference to any other common shareholders.
In share trading, a buyer of a stock is the investor who buys a share with the expectation that the market will witness a rise and he can profit from his investment. The contrary is also true because there is also a possibility for losses. The seller of stocks is always willing to sell the stocks when their prices are down. The process of buying and selling can be made easier by hiring stockbrokers who carry on business on behalf of the investors. The share broking companies offer both Online and Offline share trading facilities.

The Intra Day Traders buy and sell stocks during the same day. They can either be Scalp Traders or Momentum Traders. In Delivery Trading, the investors buy the shares with the purpose of holding. The delivery traders are either technical traders, fundamental traders or swing traders.

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Last Updated on : 26th June 2013

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