E-file your Income Tax Returns for FREE

E-file your Income Tax Returns for FREE

Stock Trading

Reviewed by Bhavana | Updated on Oct 05, 2020

Catalogue

What is Stock Trading?

Stock trading involves buying and selling of shares in a certain company. If you own certain stocks and shares of a company, it translates to you owning a piece of the firm. A professional or an individual who trades on behalf of a financial firm will be known as a stock trader. Stock traders are broadly classified into three categories - informed, uninformed, and intuitive traders.

A few of the most common traders include swing traders, day traders, momentum traders, and buy and hold traders.

What are the advantages of Stock Trading?

An individual trader will buy and sell via brokerage or an agent. On the other hand, institutional traders are mostly employed by investment companies. Stock traders provide liquidity to the markets, and employ several methods and styles for defining their strategies. Stock trading has two main types - individual stock trading and institutional stock trading.

Stock traders are different from stock investors. Stock traders trade equity securities, whereas stock investors utilize their own funds to purchase securities. The stock investor's primary goal is to produce interest income or to profit from the increase in value, also termed as capital gains.

Highlights of Stock Trading:

  1. A new stock trader needs to look up to the strategies and experience of a successful trader.
  2. A stock trader plays a vital role in the market since he or she renders the much-needed liquidity in the market, which in turn helps investors as well as other traders.
  3. Often, traders utilise technical analysis for determining how a stock is going to move.
  4. Mostly traders are not married to just one style, they combine several strategies into their trading techniques.

India's $2.1 trillion stock market has been powering to new highs as foreign investors pile into country's shares. Foreigners purchased a net $5 billion, give or take, of the country's shares so far the third quarter of FY20, while domestic investors have remained buyers of equity funds. Stocks are simply acting as a leading indicator for the economy.

Conclusion

Stock traders are individuals who are involved in trading equity securities. The primary goal of stock traders is to buy and sell shares in various companies. They intend to gain profit through short-term gains via stock price fluctuations either for their clients or for themselves.

Related Terms

Recent Terms