Online share trading in India is much the same as online share trading around the globe. There are no tricks, secrets or shortcuts to successful online trading. There are many different systems and techniques used for trading stocks online. Most online brokers provide educational resources for traders and investors. There is no substitute for education and experience when it comes to online share trading in India.
A demat account is required for offline and online share trading in India. A demat account is a dematerialized electronic account in which all shares and securities are tracked electronically. A demat account is required by the Securities Exchange Board of India, which is the national regulatory authority. The demat account was created to replace the cumbersome method of trading paper shares.
There are two types of online share trading in India. Day trading is the buying and selling of shares during the same trading day. This type of intraday trading is typically done in a margin account. The trades must be closed the same day, a process that is called squaring off. If a cash account is day traded, then squaring off is not necessary.
Margin day trading is highly technical and requires trading knowledge and experience. A high degree of risk is assumed when trading a margin account. Market volatility can result in magnified losses. Brokers might offer reduced fees to day traders, but this will vary among brokers.
The second type of online share trading in India is called delivery trading. Delivery trading is simply the buying of shares to hold for more than one day. Shares purchased with the delivery option might still be sold the same day, but an additional commission fee might be charged. Shares purchased in an intraday account must be squared off the same day. Any shares purchased using the delivery option are delivered into the demat account electronically.
Fundamental analysis of markets in India is the same as the fundamental analysis of any market or company. It is the analysis of the financial stability of a company, its past performance and its future prospects. Fundamental analysis can be accomplished through time-consuming evaluations of company reports. This service might also be provided by brokers and online vendors. Software programs are available that provide fundamental analysis.
Technical analysis is typically done by the trader. Charting programs are provided by brokers and are for sale from vendors. Technical analysis studies are usually done on charts using a variety of indicators, chart patterns and drawing techniques. Educational resources are available online for the development of these skills. Many brokers provide training with the charting platform provided.
Successful traders typically use a trading system. A trading system provides entry and exit signals along with stop loss parameters. Trading systems can be purchased or developed by the trader. Trading systems also include a money management plan, which might be the most important element of the system. Online share trading in India requires skills that must be developed through education and experience.