Primary and Secondary Markets

For the shares, its possible for investors to buy them from two different sources. From the company itself and then from other investors. First one is called the Primary Market and the later is known as Secondary Market.

PRIMARY MARKET

This is the market where initial shares and bonds are sold by companies themselves directly and hence the proceeds of the same goes to them, the issuer. This is the place where the company gets cash for selling its financial assets

SECONDARY MARKET

This is the place where shares and bonds are bought by investors from other investors. This is the place of high activity when compared to the primary market. It is a organized market for securities. New York Stock Exchange (NYSE), Bombay Stock Exchange (BSE),National Stock Exchange NSE, bond markets, over-the-counter markets, residential mortgage loans, governmental guaranteed loans etc. are some examples.

What is Demat Account ?

Demat refers to a dematerialised account.

Though the company is under obligation to offer the securities in both physical and demat mode, you have the choice to receive the securities in either mode.

If you wish to have securities in demat mode, you need to indicate the name of the depository and also of the depository participant with whom you have depository account in your application.

It is, however desirable that you hold securities in demat form as physical securities carry the risk of being fake, forged or stolen.

Just as you have to open an account with a bank if you want to save your money, make cheque payments etc, Nowadays, you need to open a demat account if you want to buy or sell stocks.

So it is just like a bank account where actual money is replaced by shares. You have to approach the DPs (remember, they are like bank branches), to open your demat account. Let's say your portfolio of shares looks like this: 150 of Infosys, 50 of Wipro, 200 of HLL and 100 of ACC. All these will show in your demat account. So you don't have to possess any physical certificates showing that you own these shares. They are all held electronically in your account. As you buy and sell the shares, they are adjusted in your account. Just like a bank passbook or statement, the DP will provide you with periodic statements of holdings and transactions.


Is a demat account a must?

Nowadays, practically all trades have to be settled in dematerialised form. Although the market regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of upto 500 shares to be settled in physical form, nobody wants physical shares any more.

So a demat account is a must for trading and investing.

Most banks are also DP participants, as are many brokers.

You can choose your very own DP.

Features of Successful Traders

Personality

What are the key personality traits that successful day traders tend to have in common? Here are some of the most important ones:


Confidence

This is perhaps the most important personality trait of good day traders. You won't succeed at day trading unless you have a high measure of confidence in yourself. Lack of self-confidence will result in doubt, indecision and second-guessing which, in turn, will lead to missed trading opportunities and frequent losses. You must believe in yourself when day trading. If not, you will be better off pursuing some other endeavor.


Discipline

In order to day trade successfully, you must develop a trading plan and consistently stick to it. You must avoid a "shooting from the hip" or a "seat of the pants approach" to day trading. Get out of the market when you have reached your objective and do not let emotions like fear and greed influence your trading decisions.


Decisiveness

Good day traders do not hesitate to "pull the trigger" when entering and exiting trades. Traders who are in the habit of being tentative or indecisive will never become successful.


Passion

Most successful day traders have a true love or passion about their trading activities. If you do not enjoy reading charts, dealing with numbers, reading market news, interpreting quote screens, learning new trading strategies and working independently in a fast-paced environment, then day trading is probably not your cup of tea.


Ability to Accept Failure

Good day traders know that many of their trades will fail to meet the original objective. They do not, however seek to blame someone else for their loss, and they don't dwell on it. They attempt to learn from their mistakes and move on to the next trade.


Ability to Accept Risk

Another personality trait of good traders is that they are comfortable with risk and are prepared to lose money from time to time. If you are afraid that you will, on occasion, lose money, then day trading is not for you.


Patience

Good traders do not rush into trades. They take the time to select good trading opportunities and do not place orders simply for the sake of holding a position in the markets at all times. On some market days, where few good trading opportunities exist, they are content to simply stand aside and wait.


Concentration

In day trading, a great deal of real-time information has to be absorbed, analyzed and acted upon in intense bursts throughout the trading day. This requires a great deal of concentration and stamina on the part of the trader, and the ability to avoid distractions. Day trading can be very hard work and a lack of concentration can doom a trader to failure.

Basic Terms

Earnings per Share: The amount of profit each share of a company is entitled to.

Going Public: Slang for when a company is planning an IPO.

IPO: Short for Initial Public Offering. An IPO is when a company sells stock in itself for the first time.

Market Cap: The amount of money you would have to pay if you bought ever share of stock in a company. [To find out what it is, multiply the number of shares by the price per share.] Short for Market Capitalization.

Share: A share represents an investor's ownership in a "share" of the profits, losses, and assets of a company. It is created when a business carves itself into pieces and sells them to investors in exchange for cash.

Ticker Symbol: A short group of letters that represents a particular stock [e.g., "Coca Cola" is referred to as "KO"].

Underwriter: The financial institution or investment bank that is doing all of the paperwork and orchestrating a company's IPO.

Stock Market : Its a market which facilitates the buying and selling the shares of companies by connecting buyers and sellers . It can be considered as a mediator between buyer and seller. So anyone who wants to buy or sell shares can do it from stock market.

Sensex and Nifty : These are indexes of BSE (Bombay Stock Exchange) and NSE(National Stock Exchange). Sensex and Nifty, both are indicators of how prices of major stocks are moving at any point of time. Sensex comprises of 30 Shares and Nifty comprises of 50 shares. They are calculated by a method called "Free Flow Market Capitalization" . When sensex moves up it indicates that on an average more shares have increased there value and some have declined and vice-verse. It moves up or down depending on the combined valuations of the shares they comprise of.

Market Capitalization : This means how much worth all company shares collectively are. Simply putting: Market Capitalization = Total number of shares available X Current Price . Its the total money required to buy all the shares of the company available to public.

Should I start Trading..??

If you are still not about should you start trading then read this ;
Ask yourself why you want to day trade. Is it because you perceive day trading to be a relatively easy way to get rich quickly? Is it because several of your friends and colleagues are doing it. If so, be aware that none of these reasons are valid reasons to commence day trading. First, although one can make a lot of money day trading, it is far from easy to do so, and the risk of large losses is often there. Second, successful day traders have a true love or passion about their trading activities. If you do not enjoy reading charts, dealing with numbers, reading market news, interpreting stock quote screens, learning new trading strategies and working independently in a fast-paced environment, then day trading is probably not your cup of tea. In other words, day trade only if you think you will enjoy the challenge, and are prepared to spend considerable time to acquire the knowledge and experience necessary to become successful. Otherwise, look for something else to do.

Investing Fundas from Warren Buffet

Widely considered the most successful investor of all time, Warren Buffett is a luminous example of the school of value investing. Starting with an initial fund of $105,000 in 1956, Buffet grew it to $45 billion over the next 50 years, making him the second richest man in the world. Though he is widely recognized as being an investor, the bulk of Buffet's wealth was built through intelligent use of leverage offered by his insurance companies. Since most individual investors do not have access to the type of capital that Buffet does, it is not easy to replicate his astounding wealth-building feat. However, by understanding and applying the basic guidelines of Buffett's investment approach to their own investing decisions, most long term investors can comfortably beat the returns of all but the best mutual fund managers.

So, how did Buffet accumulate the huge fortune that he eventually gave away to the charitable foundation run by his best friend, Bill Gates? One of the greatest attractions of Buffett for investors is that his investment methodology is easy to understand. However, it is far more difficult to apply because it calls for large amounts of patience and calm when your stocks move against you. It is also difficult to apply because it requires an orientation towards research and the ability to understand the complexities of accounting and finance. But for those willing to invest time and effort into mastering this approach, superlative investment performance over the long term is guaranteed.

Invest in Businesses, Not in Stocks

"Whenever we buy common stocks for Berkshire's insurance companies (leaving aside arbitrage purchases), we approach the transaction as if we were buying into a private business. We look at the economic prospects of the business, the people in charge of running it, and the price we must pay." -- Warren Buffett

This is the cornerstone of Buffett's investment style. Whenever he evaluates an investment opportunity he analyses it as a business and not as a stock. This makes him look closely at the company's fundamentals, earnings prospects, financial health and management. Conversely, this style of evaluating a business prevents him from buying a stock just because it is going up even though it has dubious prospects. A lot of investors tend to buy stocks based on tips from friends, acquaintances or brokers. By adopting Buffett's approach, you can save yourself a lot of grief later on.

Only Buy Businesses that You Understand

"Did we foresee thirty years ago what would transpire in the television manufacturing or computer industries? Of course not. Why, then, should Charlie and I now think we can predict the future of other rapidly evolving business? We'll stick instead with the easy cases. Why search for a needle buried in a haystack when one is sitting in plain sight?" -- Warren Buffett

Buffett has a track record of generating 21 per cent annually compounded returns over a 50-year time frame, a feat matched by very few investment managers. Though technology companies delivered some of the best returns during this period, Buffet has never owned one for the simple reason that he could not understand the long term prospects of these companies and evaluate them thoroughly. So the next time you get a tip to buy a "hot" company that you do not understand, you should ask yourself: "If the greatest investor in the world will not invest in something he doesn't understand, should I?"

Buy Companies with Defensible 'Franchise'

"As Peter Lynch says, stocks of companies selling commodity-like products should come with a warning label: 'Competition may prove hazardous to human wealth'." -- Warren Buffett

Most of Buffett's portfolio companies, such as Coca Cola, Gillette (now Procter and Gamble), American Express and Washington Post, are businesses which have a significant hold over their market. This is because they have inherent competitive advantages, whether it be a highly recognizable brand, or near-monopoly status in a geographic area. Such companies can typically raise their prices without fear that customers will walk away. This in turn produces fantastic earnings growth and, consequently, great investment performance. So, before you make an investment in future, try to understand whether the company you are investing in has a strong and defensible market position and whether it can raise prices if it needs to.

Hold for the Long Term

"We are willing to hold a stock indefinitely so long as we expect the business to increase in intrinsic value at a satisfactory rate . . . we do not sell our holdings just because they have appreciated or because we have held them for a long time." � Warren Buffett

Buffett's companies have generated enormous returns for him. For example, his investment of $10 million in 1973 in the Washington Post Company had grown to more than $1 billion by 2003. While a lot of us may be able to do this occasionally, Buffett has generated such returns with startling regularity. One of the reasons he is able to do so is because he holds for the long term and is not quick to enter or exit businesses. In fact, he stuck with WPC for two years even though its price fell below his purchase price because he understood the fundamentals of the business and believed that it was undervalued. Even once it became profitable, he was not quick to exit because he believed that it had greater potential. He held it through several bull and bear markets and no greater proof is needed than the return he achieved to show that he was right in holding it for so long.

Ignore Short-Term Fluctuations in Price

"Charlie and I let our marketable equities tell us by their operating results�not by their daily, or even yearly, price quotations�whether our investments are successful. The market may ignore business success for a while, but eventually will confirm it." � Warren Buffett

The stock market has a tendency to overreact on both the upside and downside. Often the market ignores the fundamentals of a business and reacts sharply to news flow. Sometimes entire sectors become either unduly depressed or overpriced. One of the key pillars of Buffett's approach is to ignore short-term fluctuations in price. He does not sell a stock because the market suddenly decides to drop. Neither does he buy one because it is going up. Once Buffett has calmly evaluated the fundamentals, he will buy the stock if its price is right. If the stock dips after he has purchased it, he does not worry so long as its fundamentals are good. Had he gotten jittery due to short-term price fluctuations, he would have been a lot less richer than he his currently.

Buy Good Businesses When Prices are Down

"If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they feel elated when stock prices rise and depressed when they fall. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices." � Warren Buffett

On 19 October 1987, all global stock markets crashed. The Dow Jones Industrial Average actually suffered a decline of 22 per cent, the greatest single-day drop in its history. Every stock on the market fell. Most people sold their holdings in panic that day. Buffett, however, was buying! He made the single largest stock purchase of his life that day. While all others around him hit the panic button, Buffet bought 10 per cent of Coca Cola for $1 billion. Not only was it his largest single stock purchase, he also became the single largest shareholder in the company. In his analysis, Coca Cola had a great business, great long-term prospects and the ability to expand because of globalisation. If the market was willing to sell it at an unreasonably cheap price, he wanted to scoop it up with both hands. And scoop it up he did! Coca Cola became one of the most successful investments in Berkshire's portfolio. By 2006, Buffett had made over $11 billion on Coke since he bought it.

Don't Be an Active Trader

"Indeed, we believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a romantic." � Warren Buffett

Buffett is an atypical investor not only because he is highly successful, but also because he does not even look at stock tickers. He believes that trading too much is a tax-inefficient and costly approach to investing. Consequently, he has a very low turnover portfolio, very low brokerage charges and has not paid very much in the nature of capital gains taxes.

Do Not Over-Diversify

"If you are a know-something investor, able to understand business economics and to find five to ten sensibly priced companies that possess important long-term competitive advantage, conventional diversification makes no sense for you." -- Warren Buffett

A striking aspect of Buffett's portfolio at Berkshire is the small number of stocks in it. This number has rarely exceeded 10 stocks. Buffett believes that there are very few outstanding investment opportunities at any given point of time and that one should invest enough in each of those to make a substantial difference. In contrast, most people fill up their portfolios with more than fifty stocks. As a result, even if a stock appreciates 100 per cent, the impact on their net worth will only be 2 per cent. Investors who want to generate truly outstanding returns should identify a small number of great businesses at the right prices and invest a significant amount of their money in each of them.

Invest Only When There is a Margin of Safety

"Margin of safety" is a slightly difficult concept to understand. It can be loosely defined as the difference between value and price. If the value of what you buy is higher than the price you pay for it, you have a high margin of safety. If the price you pay is greater than value, you have a low margin of safety. When the margin of safety is high, the investor need not worry about short-term fluctuations in price and can buy more if he or she has the resources to do so. Also, if you are investing in a situation with a significant margin of safety, you are likely to make a higher return because you are buying at a relatively low price.

However, how does one quantify this margin of safety? It is admittedly a grey area. There are seemingly scientific approaches, such as the discounted cash flow, which are taught in most corporate finance textbooks. In practice, though, it is both very subjective and very difficult for an individual investor to apply. However, there are other short cuts which are more approachable. Since the discounted cash flow ultimately crystallizes into the price / earnings (P/E) ratio, one way of estimating the margin of safety is to look at the P/E ratio. A low P/E means there is a margin of safety. But even this approach has its pitfalls. Slow growing, lousy companies often tend to have low P/E ratios. And, sometimes, very promising companies have high P/E multiples.

One way around this problem is to divide the P/E ratio by the growth rate of the company's profits to arrive at its price-earnings to growth ratio. Thus, if a company's P/E is 20 and the growth rate of its profits is 20 per cent, its PEG is 1. Oftentimes, a PEG of less than 1 implies that there is a significant margin of safety. A PEG of greater than one means that the margin of safety is not very high.

That said, PEG is not the holy grail of valuation and there are several ways to value a company -- and all these approaches have their flaws. You can consider your time well invested if you spend some time researching valuation by reading a corporate finance textbook.

Thus, Warren Buffet's investment approach is easy to understand, but calls for significant effort on your part to understand businesses, evaluate them and invest successfully but then, nobody said that becoming a billionaire was easy!

Warren Buffet : Worlds Richest Man !!

Warren Edward Buffett (born August 30, 1930, in Omaha, Nebraska) is an American investor, businessman and philanthropist. He is regarded as one of the world's greatest stock market investors, and is the largest shareholder and CEO of Berkshire Hathaway.[3] With an estimated net worth of around US$62 billion,[4] he was ranked by Forbes as the richest person in the world as of March 5, 2008.[5]

Often called the "Oracle of Omaha,"[6] Buffett is noted for his adherence to the value investing philosophy and for his personal frugality despite his immense wealth.[7] His 2006 annual salary is about $100,000, which is on the low side of senior executive remuneration in other comparable companies,[8] and when he spent $9.7 million of Berkshire's funds on a business jet in 1989, he jokingly named it "The Indefensible" because of his past criticisms of such purchases by other CEOs.[9] He lives in the same house in the central Dundee neighborhood of Omaha that he bought in 1958 for $31,500, today valued at around $700,000.[10]

Buffett is also a noted philanthropist. In 2006, he announced a plan to give away his fortune to charity, with 83% of it going to the Bill & Melinda Gates Foundation. In 2007, Buffett was listed among Time's 100 Most Influential People in The World.[11] He also serves as a member of the board of trustees at Grinnell College. Grinnell College has the second largest endowment of any liberal arts college in the United States.[12]

STOCK MARKET LIST

This is a list of world's major stock exchanges and other exchange resources. The number of stock exchanges in the world is growing rapidly, so we may not be able to list them all. Some of the names of the major stock market in the world are listed below:

African Stock Exchanges
GhanaStock Exchange, Ghana
Johannesburg Stock Exchange, South Africa
The South African Futures Exchange(SAFEX), South Africa

Asian Stock Exchanges

Sydney Futures Exchange, Australia
Australian Stock Exchanges, Australia
Shenzhen Stock Exchange, China
Stock Exchange of Hong Kong, Hong Kong
Hong Kong Futures Exchange, Hong Kong
National Stock Exchange of India, India
Bombay Stock Exchange, India
Jakarta Stock Exchange, Indonesia
Indonesia NET Exchange, Indonesia
Nagoya Stock Exchange, Japan
Osaka Securities Exchange, Japan
Tokyo Grain Exchange, Japan
Tokyo International Financial Futures Exchange (TIFFE), Japan
Tokyo Stock Exchange, Japan
Korea Stock Exchange, Korea
Kuala Lumpur Stock Exchange, Malaysia
New Zealand Stock Exchange, New Zealand
Karachi Stock Exchange, Pakistan
Lahore Stock Exchange, Pakistan
Stock Exchange of Singapore (SES), Singapore
Singapore International Monetary Exchange Ltd. (SIMEX), Singapore
Colombo Stock Exchange, Sri Lanka
Sri Lanka Stock Closings, Sri Lanka
Taiwan Stock Exchange, Taiwan
The Stock Exchange of Thailand, Thailand

European Stock Exchanges

Vienna Stock Exchange, Austria
EASDAQ, Belgium
Zagreb Stock Exchange, Croatia
Prague Stock Exchange, Czech Republic
Copenhagen Stock Exchange, Denmark
Helsinki Stock Exchange, Finland
Paris Stock Exchange, France
LesEchos: 30-minute delayed prices, France
NouveauMarche, France
MATIF, France
Frankfurt Stock Exchange, Germany
Athens Stock Exchange, Greece
Budapest Stock Exchange, Hungary
Italian Stock Exchange, Italy
National Stock Exchange of Lithuania,Lithuania
Macedonian Stock Exchange, Macedonia
Amsterdam Stock Exchange, The Netherlands
Oslo Stock Exchange, Norway
Warsaw Stock-Exchange, Poland
Lisbon Stock Exchange, Portugal
Bucharest Stock Exchange, Romania
Russian Securities Market News, Russia
Ljubljana Stock Exchange,Inc., Slovenia
Barcelona Stock Exchange, Spain
Madrid Stock Exchange, Spain
MEFF: (Spanish Financial Futures & Options Exchange), Spain
Stockholm Stock Exchange, Sweden
Swiss Exchange, Switzerland
Istanbul Stock Exhange, Turkey
FTSE International (London Stock Exchange), United Kingdom
London Stock Exchange: Daily Price Summary, United Kingdom
Electronic Share Information, UnitedKingdom
London Metal Exchange,United Kingdom
London InternationalFinancial Futures and Options Exchange, United Kingdom

Middle Eastern Stock Exchanges

Tel Aviv Stock Exchange, Israel
Amman Financial Market, Jordan
Beirut Stock Exchange, Lebanon
Palestine Securities Exchange, Palestine
Istanbul Stock Exhange, Turkey

North American Stock Exchanges

Alberta Stock Exchange, Canada
Montreal Stock Exchange, Canada
Toronto Stock Exchange, Canada
Vancouver Stock Exchange, Canada
Winnipeg Stock Exchange, Canada
Canadian Stock Market Reports, Canada
Canada Stockwatch, Canada
Mexican Stock Exchange, Mexico
AMEX, United States
New York Stock Exchange (NYSE),United States
NASDAQ, United States
The Arizona Stock Exchange, United States
Chicago Stock Exchange, United States
Chicago Board Options Exchange, United States
Chicago Board of Trade, United States
Chicago Mercantile Exchange, United States
Kansas City Board of Trade, United States
Minneapolis Grain Exchange, United States
Pacific Stock Exchange, United States
Philadelphia Stock Exchange, United States

South American Stock Exchanges

Bermuda Stock Exchange, Bermuda
Rio de Janeiro Stock Exchange, Brazil
Sao Paulo Stock Exchange, Brazil
Cayman Islands Stock Exchange, Cayman Islands
Chile Electronic Stock Exchange, Chile
Santiago Stock Exchange, Chile
Bogota stock exchange, Colombia
Occidente Stock exchange, Colombia
Guayaquil Stock Exchange, Ecuador
Jamaica Stock Exchange, Jamaica
Nicaraguan Stock Exchange, Nicaragua
Lima Stock Exchange, Peru
Trinidad and Tobago Stock Exchange, Trinidad and Tobago
Caracas Stock Exchange, Venezuela
Venezuela Electronic Stock Exchange, Venezuela

Beginners Guide to Stock Trading

In this blog u will find useful information that will transform you from a beginner to a pro in stock trading