Trading in stocks is an exciting game. The more risks you take, the more you earn. But, the risks should be calculated and thorough research of the market is an essential factor. When you understand the stock market better, and enhance your analysis and trading skills, gaining profits becomes a cakewalk. With the right trading and advisory course, you can gain knowledge and practice your skills thoroughly. Bonus! You can also receive online research certification. Want to know how? Stick with us till the end of the article.

Stock trading is nothing like conquering Mount Everest. But, the climb can get steeper and harder if you do not have adequate knowledge and expertise. So, whether you are a beginner or a pro research analyst sharping your skills is necessary for long-term gains. Before we talk about the best comprehensive stock market trading course, let’s revise and go through some basic fundamentals of the stock market.

What is a stock?

A stock is referred to as a financial instrument that denotes ownership in a corporation or a company and also represents a proportionate claim on its earnings and assets. Stocks are also referred to as a company’s equity or shares.

Stock ownership signifies that a shareholder owns a proportion or slice of the organization equal to the amount of stocks held as a proportion of the organization’s total outstanding stocks or shares. For example, an investor owns 10,000 shares of an organization with 2 million or 20 lakhs outstanding shares would have a 5% equity stake in it. Most of the companies listed in various stock exchanges have outstanding shares that amount to millions or billions.

Stocks are registered in stock exchanges. The two most popular stock exchanges in India are National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Other large stock exchanges worldwide are New York Stock Exchange (NYSE), Japan Exchange Group, NASDAQ, Shanghai Stock Exchange, to name a few.

• Types of Stock

There are chiefly two types of stocks- common and preferred. The term equities are analogous with common shares, as their combined trading volumes and market value are much proportionately larger than that of preferred shares.

The main difference between the two types of shares is that common shares essentially carry voting rights, enabling common shareholders to have an opinion or say in the corporate meetings. Corporate meetings are where matters regarding the appointment of auditors or election to the Board of Directors are voted upon. On the other hand, preferred shares do not have voting rights. Preferred shares are named this way because preferred shareholders are entitled to dividends in addition to liquidation assets before common shareholders.

Investing in Stocks

An investment advisor will ensure you that shares generate investment returns that are much superior to any other type of asset class. Stock returns arise from dividends and capital gains. A capital gain occurs when the stock you purchased is sold at a higher price than what you purchased. A dividend is the amount of profit the organization distributed to its shareholders. Dividends are an essential component of stock returns.

Those who want to risk more with their portfolios will need a higher risk tolerance. These investors are most keen to generate income from capital gains than from dividends. On the contrary, conservative investors will try to earn from dividends will choose stocks that a good record of providing substantial dividends.

4 Popular Active Trading Strategies

Active trading is the process of purchasing and selling securities established on short-term movements to gain from the price movements on a short period. An active trading strategy is one that involves the identification and timing of profitable trades by beating the market. It usually calls for a brief holding period. The popular active trading strategies are as follows:

1. Day Trading

It is the well-known and most common active trading strategy. Day Trading involves purchasing and selling of stocks on the same day before the market closes. No position is held overnight and are closed within the same day. Earlier, day trading was done by a professional trader or market maker. But, with the advent of technology and online trading, day trading is now available to novice traders as well. Day trading is the best active trading strategy if you want to beat the market average.

2. Position Trading

Often this active trading strategy is considered as a buy-and-hold strategy. On the contrary, if this strategy is used by an expert, this can become active trading. Position trading determines the trend of the present market direction, referring to charts that can be either daily or monthly. Depending on the trend, this trading can last from days to weeks. Position traders look for low highs and higher highs for determining a security’s trend.

3. Swing Trading

When a market trend breaks, it is then when the swing traders get into the game. At the end of a trend, there is price volatility as obviously a new trend is trying to establish itself. Swing traders trade, purchase and sell stocks when this price volatility sets in. This kind of trade is held for more than a day but usually for a shorter time period as compared to position trades. These traders create their set of rules based on fundamental and technical analysis.

The trading algorithms or rules help in identifying when to purchase and sell a security. The swing trading algorithm does not need to be exact in predicting price peaks and valleys, but it does require a market to move in one direction or the other. A sideways or range-bound market is a danger for swing traders.

4. Scalping

This is the quickest strategy used by active traders. Elementally, it demands exploiting and identifying bid-ask spreads that are a little narrower or wider than the normal tendency due to interim imbalances in demand and supply.

A scalper does not strive to transact high volumes or exploit large moves. Scalpers essentially try to capitalize with measured transactions on comparatively small moves that tend to occur frequently. As scalpers make relatively small profits per trade, they search for liquid markets to increase their frequency of trading. Scalping traders look for quiet markets that are not prone to price volatility.

Stock Analysis

Stock analysis can be defined as the evaluation of a particular investment sector, or a trading instrument, or the stock market as a whole. Stock analysts aim to determine the future activities of a sector, instrument, or market. Stock analysis is an essential stock market fundamental which is used for making purchasing and selling decisions. By thoroughly studying and evaluating current as well as past data, traders and investors aim to gain an edge in the stock market by making wise and informed decisions.

• Types of Stock Analysis

Basically, there are two types of stock analysis, fundamental analysis and technical analysis.

1. Fundamental Analysis: Fundamental analysis is a stock analysis technique where financial records, market shares, company’s assets, and economic reports are evaluated for making buying and selling decisions. For conducting fundamental analysis on a sector or organization, an analyst analyse the metrics of an organization’s income statements, cash flow statement, balance sheet, and footnotes. An analyst will measure an organization’s liquidity, profitability, efficiency, growth trajectory, solvency, and leverage.
2. Technical Analysis: The goal of technical analysis is to determine the probability of future price movements by studying past and present price action. Technical analysts are primarily concerned with the demand and supply, and price and volume factors that move the stock market. Charts are a crucial tool for technical analysis as they show a stock’s trend for a time period through graphical illustrations.

Both technical analysis and fundamental analysis can be used independently or together to analyse a stock effectively. Stock analysis is a great way to vet sectors, stocks, and market for creating the best investment strategy for an individual’s portfolio.

Best Comprehensive Course: Certification in Online Research, Trading and Advisory Course.

In this article, we have tried to provide you with an overview of the essential fundamentals of the stock market. But, if you want to gain further knowledge, polish your skills, upgrade your portfolio, and online research certification, then Elearnmarkets presents to you “Certification in Online Research, Trading and Advisory”, a scintillating stock market and financial advisor course for stock market novices as well as experts. This course is jointly certified by NSE Academy and Elearnmarkets.

This course aims to provide a strong background and grip on the stock market basics and essentials, starting from capital market foundation to options strategies, derivatives analytics to currency and commodities, financial modelling to technical analysis, and much more. When you enrol this course, you gain market expertise with a strong grasp of the practical aspects and with the emphasis on practical learning, you also get to learn by participating in live market trading sessions.

Bottom Line

A trading and advisory course is a necessity for every stock market investor and trader to learn contemporary techniques and get an edge in the stock market. The stock market can be bullish at times, but if you have the right knowledge and apply smart techniques, you can gain from those bullish periods as well. So, start learning and smartly trading.