What is stock market & Scope in our life –
Meaning of Stock market – Stock Market is a combination of Stock & Market. First we will understand Stock then will understand about the market.
Stock: A bunch of shares is called stock (Capital of company is divided into a small part. Each part is
called shares).
Market: We all heard very well that market is that place where no. of buyers & sellers are exists for buy
& sell.
So, A that place where shares are BUY & SEll is called stock market.
Scope in our life: Now a day’s people wants to invest their funds in form of F.D, Mutual Fund,
Bonds, Stocks Real Estate etc. Here we are discuss about stock market.
· Basically stock market is that place where people are invested in Shares of companies, which are
Listed in Stock exchange like NSE & BSE.
· Shares prices change every time (exception in circuit) when market is opened, if people get shares in a low price & sell at a high price ,then he get profit & vice-versa he get loss.
· It makes profit very rapidly if investments are make wisely & obtaining information continuously.
Types of Trade in stock market :
· Trade for investments
· Trade for Intraday
Trade for Investments: In that case investors are invest their money in stocks for a certain
period i.e. for six months or one year or any other period a investor want and hold the stock, unless investor get profit. In that case the possibilities of gaining are much higher than trading but in that case fund will be blocked.
Trade for trading : In this case investors are invest their money for a day & tomorrow for BTST or STBT.In this case profit possibilities are low than investments but Fund will be free.
Components of stock market
Basically stock market has four components for Trading/Investing.
· Equity
· Future/Option
· Commodity
· Currency
Equity: Basically trading in equity i.e. trading in shares of a company for intraday or on margin or for delivery E.g Reliance Wipro TCS etc.
Future/Option: In this segment we will buy a unit of index (Nifty/Banknifty) or shares, whose price are generally at premium sometimes at discount also. These are not stocks these are basically a contract which expires on last Thursday of every month. In this Segment risk is very high. In future/option trading required a plenty of technical knowledge as well as fundamental knowledge.
Commodity: In this segments trading in Gas Crude Oil Gold, Silver etc. In this category
Trades take places only through futures contract.
Currency : In this segments Trading in currency whether any country currency
Merits & Demerits of share market
Merits
· It makes profit very rapidly
· Safety against inflation
· High liquidity
· Full Transparency
· Flexibility
· Ownership
· It provides Financial freedom
- Dividend
Demerits
· It required a plenty of knowledge regarding companies & entire things e.g. like Laws Taxations which are required to trading
· It have a very high risk
· No regularity to earning profit
· Everyone become Avaricious that is harmful · Sometimes market is very volatile, everyone can’t survive in that particular volatility
