Top 10 features of stock trading 

We know, in layman’s terms, trading is the exchange of things between two persons or parties. Anything that holds some value can be traded for another thing that holds. The long list of items can include all food items, household essentials, precious metals, and jewellery, among others. This exchange of entities is the core principle of trading. The same goes for the economic or financial world too. One can open demat account along with a trading account and start stock trading. We shall discuss the features of stock trading. For starters, let’s first briefly explore a bit more about trading. 

Stock trading deals with the purchase and sale of shares of companies listed on stock exchanges. A stock exchange is a marketplace that provides a platform to trade stocks and other securities. Investors or traders continuously trade securities during the working hours of stock exchanges. An exchange is a place where all the companies list themselves. Investors can then buy or sell their stocks. In a way, stock exchanges act as meeting places for companies and investors.

Significant Features Of Stock Trading

Now that you know the basics of stock trading let’s delve into its key features. Here is a list of the most important things we must bear in mind. 

1. Firstly, trading in the stock market refers to buying and selling of stocks. It should not be confused with the direct exchange of stocks for stocks. Whenever an investor wants to buy a stock, he will have to make a purchase by paying its price. Similarly, they will sell stocks to get money in return.

2. Investors or traders have to open a demat account and a trading account to begin stock trading. These are investment accounts that facilitate share trading. A demat account is required to hold the stocks that one buys. It stores the securities safely in electronic format. The trading account is a platform which you have to use for placing your orders. All your buy/sell orders reach the stock exchange via trading accounts only.

3. Traditional method of trading involves floor trading. The floor traders execute the orders placed by the investors. They find suitable buyers and sellers for shares that the investors want to trade. However, with the advent of online facilities, the role of floor traders has diminished. 

4. A stockbroker is an essential part of the whole scheme of things. For stock trading, individuals need the services of stockbrokers. They are Depository Participants (DPs) who have the license to provide facilities for share market investing. It is a DP that provides a demat and trading account.

5. Stock trading has evolved over the years. Technology has been the most significant influencer. With technological advancement, stock trading became easier and easier. Today, we can open a demat and trading account online without going anywhere. Moreover, trading platforms facilitate trading from anywhere. Well-known firms like Kotak Securities offer the best mobile trading app for convenient trading.

6. The next interesting fact is that there are various types of trading strategies. Traders can follow the approach of their choice. Day trading, scalping, trend/momentum trading, mean-reverting, and breakout trading are popular ones. We can divide these strategies into two categories. They are value investing and short-term trading. Value investing aims to create wealth in the long run. Short-term trading strategies like intraday trading are for quick profits. 

7. Stock trading time in India depends on the working hours of stock exchanges. They open at 9:15 AM and close at 3:30 PM. Before 09:15 AM, there’s a pre-opening period. 

8. Stock trading is an excellent option to make profits. The share prices of stocks can increase, resulting in profits for traders. When companies have good business, their stock value grows. The news leads to higher demand for such stocks, resulting in a price rise.

9. There is a contrasting aspect of the previous point. Stock trading comes with its own share of risks. One can incur losses if he makes wrong bets. So, it is necessary to learn properly about the stock market before trading.

10. Finally, readers should know that stock trading is governed by certain rules and regulations. Every market region has regulators who frame these guidelines. For instance, in India, the Securities and Exchange Board of India (SEBI) is the concerned authority. If you are looking to start stock trading, go through SEBI guidelines first.

Conclusion

Stock trading entails purchase and sale of stocks through a trading account. Brokers provide trading accounts and also facilitate our transactions. Trading on exchanges happens between specific hours only. There are numerous strategies and techniques to trade stocks. However, note that investors must pay certain charges, known as brokerage fees. All these activities take place as per SEBI guidelines. SEBI also provides licences to stockbrokers. One can open a demat and trading account with any registered broker and begin stock trading. Readers should always pick a reputed broker that will assist them throughout their journey.