What Are The Different Types Of Share Trading In India?

There are a whole lot of ways in which you can buy or sell shares in India. It depends on your patience, past experience and comfort with stocks. For example there are day traders, who may buy shares and sell it after a few minutes, while others could hold onto shares for years.

Here are a few ways in which you can engage in share trading in India. When we say trading, we are also implying investment.

Day trading

This is a popular form of trading, wherein you buy and sell the shares on the same day. You can also sell first and buy later, which is called short selling. Traders buy huge quantities of shares and take advantage of the volatility in the stock markets. For example, a day trader may but 1000 shares of State Bank of India at Rs 177 and sell the same at Rs 178 on the same day, thus pocketing Rs 1000.

This maybe done in the cash market or the futures market. The F&O market deals in large quantities, where there is a margin payable and you do not have to pay the entire amount.

Now day traders do a lot of technical analysis before investing by studying charts and price movement. They may ignore fundamentals and just study share price movement. They could also use arbitrage opportunities like the price difference between the exchanges to make money.

Investors

Investors are not traders really. They buy and hold shares for the long term and thus make money from long term movement of stock prices. For example, there are many investors, who are still holding the shares of blue chips like ITC, Hindustan Unilever and Reliance Industries for the last several years.

Trading in the IPO or the grey market

Gone are the days when there were plenty of Initial Public Offerings (IPOs). Today, we see far lesser number of IPOs, then they were. This has made the grey market opportunities for traders very less in the IPO market.

What should you do to first start share trading in India?

You need to open a trading and demat account, before you begin trading in the Indian markets. There are many discount brokerages that offer low amount of brokerage for traders at a flat Rs 10 or Rs 20. If you are investing, it's better to go with a reputed brokerage firm that can offer advise and research reports.

In any case, those who are new are not advised to trade, but to invest in shares for the long term. Trading can be dangerous, even for those who have the knowledge and is fraught with risk. Those who are new should certainly not trade and should keep long term goals in mind and invest accordingly.

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