Stocks trading- Detailed explanation of stocks trading

The procedure involved in the operation of purchasing the stocks, disposing the purchased stocks and proper evaluation of stocks is called Stocks trading. The careful strategy adopted in devising the investment operation. Stocks Trading is done in two ways. One is manual method and other way is processing online. They are classified according to the type of sectors involved and as well as similarities seen between the related companies. Eleven sectors are available in this stocks trading. Among the eleven sectors two are considered as defensive and the remaining sectors comes under the cyclical category.

Defensive sector is considered to be safest one in which one can invest or do trading because of the less risk involved in it. The companies which come under this sector do not have any kind of margin pressures and valuations are attractive for long term perspective. They do not suffer much from the bears operating in the trade market. Even if they drop drastically on the bearish sentiment, they recover fast to gain the confidence of new investors and to sustain its value in the share market. The decent rise in the prices is seen in this sector of stocks when bulls are running high in the market. One also should note that rise in the prices will not be that high as one is expecting it to be, sudden rise of price is not seen , generally steady increase of price will take place. On short term note this is not the right choice for investing in this stock sector.

The cyclical sector stocks have huge fluctuations in either way according to the sentiment prevailing in the stock market. Basic metals, capital goods, communications, consumer related, energy, financial, health care, technology, transportation are categories which belong to the cyclical sector. One can witness huge fluctuations in upside or downside trend resulting in huge profits or maximum losses. Data available in the market reveals that all the companies which come under this sector will not move up, only companies with good back ground and infrastructure respond to the market trend nicely. This is useful for short term perspective. This is grouped according to the financial assets which the companies are holding with them. Different analysis is carried out during the stocks trading to bring out appropriate results about the stocks.

Stocks trading primarily include opening trading account with Brokerage Company. The commission charged differs from on Brokerage Company to another. There are different types of Accounts available. They are Cash Accounts, Margin Accounts, and Discretionary Accounts. Most of the client trade in cash account ranging from small investors to big investors. There are another section of traders who perform their activities in margin account. The different brokerage companies offer different variety of services which vary from one company to another. The companies provide the services at a reasonable low cost and some of them charge high for the same kind of services given. Even concessions are given to the client based on the brokerage they are getting for the month.

Brokers are of two types. One is full service broker and other one is online. Full service broker are the ones who give good recommendations about the stocks and get paid by the firm in which the trading accounts of the different people are maintained. They also give different analysis so that active trading takes place in full swing on the behalf of their firm. They also come with reports, charts and research information about different stocks. The stock executive travels to ones residence for opening an online account or to clarify any of the troubles faced by the account holder.

Before opening an account stock executive of the firm gives some tips and features of their brokerage company. Stock Online brokers do not give recommendations about the stocks and their duty is to open new account. Stocks trading duration per day ranging from six to six and half hours which is merely related to the time set by different exchanges available all over the world.

Exchanges have set norms and procedure for stocks trading. A stock can get de-listed from trading market and get re-listed in the date mentioned by them to the exchange. When a stock is over valued in the market and not much buying is seen in the trading by the mutual fund companies and other country investors or normal investors, then company convenes the general body meeting and with the consent of existing shareholders they go for the split in the stock price in the ratio which is based on the original current value of the price. Huge buying is witnessed generally in the split stocks because it touches low value after the split had taken place.

Stocks are also differentiated in the form of large-caps, mid-caps and small-caps, and number of top shares in the exchange. The economic growth of a country is dependent to a large extent on the Stock trading effectiveness. All round development also comes to a halt if there is any kind of inefficacy witnessed in the share market through out the year. Generally highly developed countries have a strong economic conditions and favorable atmosphere is created so that more investments take place in the share markets which further improves overall development of those countries.