Know Basic Operational Things  of the Stock Market

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Role of Stock Broker in your Trade

Stock broker is the medium through buyers and sellers place their order. Stock broker is individual who is associated with the brokerage firm. Stockbroker buys and sells stocks for both retail and individual clients through stock exchanges. Stock broker offers variety of services to their clients including market research, analysis of a stock market, stock specific opinions, and expert advice to the client. Stockbroker holds the degree in finance to give crystal clear insight of the market to their customer.

Traditional Price Display

In order to transact in the share market, trader should be aware of the live price of the stock. Initially, these prices were obtained via ticker tape. Ticker tape was a large ribbon of a paper on which stock prices were printed. This is the reason we refer stock prices as a stock ticker.

How Stock Quotes are Helpful?

A stock quote contains the essential information required to place order in a live market. This quote contains the live price of stock at which transactions are placing in the market. Stock quotes gives information about the current bid price. The current bid price is the highest price at which someone is ready to buy the stock. Whereas offer price is the lowest price at which someone in the market wish to sell the stock.

Stock quote contains stock information by their symbol. This symbol contains three to four capital words. Example, Hero Motocorp Ltd is referred by HEROMOTOCO. The stock quote contains chart which represents stock historical price. The stock quote also gives last traded value of a stock including fifty-two weeks high value and fifty-two weeks the low value of a stock.

What is the Role of Market Order

Traders place their orders in live market by filling market orders. The market order is a simple order form which instructs the broker to place trader orders i.e. buying and selling the share at the available price for selected equity. A market order does not give a guarantee of an order placed by trader until and unless it matches the market trend.

How Market Order Works

Traders can place a limit order via order book. Let’s take an example, trader wish to buy 200 quantity of a heromoto corp share at 3,729 whose market value is 3,729.50 then the trader can buy only 100 quantity of a share offered at 3,729 prices. For remaining quantity, traders need to wait until unless some other sellers come to market at expected down price.

Place Stop Order & Prevent Losses

Stop Order is another form of order in stock market. Stop order is also named as the stop-loss order which will cover losses of a trader. Stop order will get triggered only when the stock reaches to the quoted price. Once stock reaches to given price then pre order turns into the market order and get executed.

Let’s see one example, if the trader is buying hero motocorp share at 3,729 and he placed one sell order by quoting price at 3850 then in this scenario his order will get executed only when the stock reaches to the given price.

Marginal Trading

Margin trading is another form of trading in the stock market. Margin trading stock broker facilitates its client to borrow money to buy shares in the excess amount of cash. Margin trading is facilitated by multiple brokers. Brokers attract new customer and their existing clients by offering margin trading.

Short Selling

Short selling is a type of order, trader execute in the live market hoping stock price will drastically go down.

Let’s see example

Current stock price of hero motocorp share is 3,729 rs/- and  Shyamlala expecting to see the price at 3650. In this situation, shyamlala will place an order to sell hero motocorp shares at the current market price. Later on, when hero motocorp share price goes down Shyamlala will purchase share again to complete short selling order. The difference between the selling and buying price is the profit in this scenario.

Conclusion:

Clear cut understanding of the stock market will help you to make a lead position in profit. Make sensible investment of your saved earnings. Avoid products like marginal trade to make healthy and tense free investment.

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