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What is a Freak Trade in Stock Market and How to Survive from it?
What is a Freak Trade & How to Identify it A freak trade in the stock market is like a sudden/ unexpected move in a stock price. Imagine you're riding a bike smoothly, and suddenly it hits a big bump making you jump unexpectedly. That's what a freak trade does to a stock's price. Sudden MovementRead more
What is a Freak Trade & How to Identify it
A freak trade in the stock market is like a sudden/ unexpected move in a stock price.
Imagine you’re riding a bike smoothly, and suddenly it hits a big bump making you jump unexpectedly. That’s what a freak trade does to a stock’s price.
Sudden Movement in the Price:
A freak trade is when a stock’s price makes a rapid movement (up/ down) in a very short period of time, in just a couple of seconds/ minutes.
Unusual Volume:
During a freak trade, there’s also a rise in the volumes (increased quantity in the buying/ selling). It’s like a sudden rush of people trying to buy or sell that stock.
Causes of Freak Trade:
The reason behind the freak trades is due to technical glitches, software errors, or even large trades executed by the Institutional Investor’s by mistake.
When such a sudden move occurs, it will create panic in the market. People might start selling or buying more, adding to the chaos.
Impact of Freak Trades:
A freak trade can lead to significant financial gains or losses for traders and investors within short period of time. Some people might get benefit if they’re on the right side, but most of the people witness losses.
Market Reaction:
After a freak trade, regulators and stock exchanges usually step in to investigate what happened and sometimes cancel or correct the trades to ensure fairness.
Conclusion: A freak trade is like a surprise party, but not everyone enjoys it. It’s like a sudden burst of excitement or shock in the stock market.
Traders and investors need to be careful and prepared for such unexpected events to safeguard their capital.
See lessWhy 90 Percent of Traders Lose Money?
Why 90% of the traders Lose Money in Stock Market The article speaks about the various factors that need to be borne in mind before starting your trading in stock market. It has been a record fact that about 90 percent of the traders lose their money in the stock market. Below lines help you to explRead more
Why 90% of the traders Lose Money in Stock Market
The article speaks about the various factors that need to be borne in mind before starting your trading in stock market.
It has been a record fact that about 90 percent of the traders lose their money in the stock market.
Below lines help you to explore the various factors that can enable you in stopping the impending losses in the stock market.
Why traders lose money in stock market
Most of the beginner traders in stock market are losing money and thus leading to frustration, pain and anguish.
Stock markets have different segments of trading that allow traders to trade in their specific area of interests. These segments are Intraday trading, options trade, and foreign exchange trade.
If you enter into any of these segments you will need a better understanding of the trading concepts to make money. Experts relate the percentage of traders having incurred financial loss is about 90 percent at the stock market.
Believe in Knowledge based Culture:
Stock market experts do advise new investors to get knowledge on the prevailing market conditions, factors that influence the price variations.
Before you plunge into stock markets to earn money you must have a perfect layout that defines in the following lines. You must define your risk tolerance, trading cycles, investment goals, etc.
Lack of wisdom causes mistakes and the probability of making profits on stocks can reduce considerably. To make profits in good proportion, you are recommended to undergo essential education and training.
You can improvise your educational and training skills by seeking information from books, seminars, course participation, and essential tips from the stock experts desk.
Online free resources, articles, videos and forums can serve to be absolutely informative. Exchange of opinions, and query posting can enrich your knowledge.
Beginner traders must experience a real time analysis by employing paper trading and back testing. You can gain virtual experience by employing your tasks to specially designed software tools.
Emotional Trading:
Market volatility can shake your emotions and draw you into hasty actions that result in heavy losses.
To keep up in pace with the stock market fluctuations you need to be objective oriented and remain disciplined when participating in trades.
Greed can pull you into swamp which means you may get charged up to play high risks and attempt to fulfil your irrational financial gains. In stock trades you will have to balance hope and regret in a skillful manner.
Being excessively hopeful can make you hold positions for a time that may cause damage to your underlying assets. Similarly, a wild guess can eject your profitable levels and you will have skipped opportunities in buying or selling the good stocks.
Alternate means to regulate your stock business when you get inclined to emotional trading. You must utilise the stock trading features established by the stock markets (BSE, NSE)
For instance, you must adopt stop loss to staple the financial loss component, Strike price is to define your urge to sell stocks. If you focus on the long term goals of trading strategy then your trading decisions will be more sturdy.
Traders’ Risk Management Control
You must lay out a clear cut plan that limits you from trading excessively and set goals for good returns before initiating the trading.
You must retain a conscious effort in setting limits that can manage the risk. You will have to set stop loss orders to limit losses, spread risk through the diversification of positions and never trade beyond your position sizing limits.
Avoid Over-trading:
Overtrading can be due to your participation in too many, often coupled with emotions or impulsive nature. Hence it is always suggestive to never cross your planned strategy.
If you perform overtrading, you will have to bear the high trading cost, slippage cost, missed opportunities, and even cause lack of focus and direction.
Applying Wrong Trading Strategy:
First, every investor has a unique personality, and can feel comforted only when you establish a specific goal set.
Second, adaptability to change is the key feature in stock trading and you must transform your strategies in accordance to market conditions and real-time experiences.
Third, you must maintain a great degree of understanding on your personal preferences and then apply the trading strategy. Be mindful, every chosen strategy may not be suitable in earning your predetermined goal set.
Fourth, you must adopt risk tolerance, screen time availability, and market talk and its sentiments.
Fifth, depending on your objectives, you must prefer intraday trading, long term investing or swing trading. Your choice of strategy should obtain results that match your investment goals.
From the concluding lines you must understand that you should never move in haste until or unless you haven’t chalked a clear cut trading strategy.
See lessHow to Open a Demat Account and What are the Required Documents?
Documents Required for Opening Demat Account There are more than 20 stock brokers with which you can open a new demat and trading account. In order to open a Demat account with any stock broker, you'll need a few important documents. The following are the mandatory documents required for opening a dRead more
Documents Required for Opening Demat Account
There are more than 20 stock brokers with which you can open a new demat and trading account.
In order to open a Demat account with any stock broker, you’ll need a few important documents.
The following are the mandatory documents required for opening a demat account.
1. PAN Card (Permanent Account Number):
PAN Card is a crucial document required for any financial transaction in India, including stock market trading. A valid PAN Card is mandatory to open a demat account.
2. Aadhaar Card:
Aadhaar card is needed for the purpose of identity and address verification. It’s a proof of your residency in India.
3. Address/ Identity Proof:
Documents like voter ID, passport, driving license, or utility bills (electricity, water, gas) can be used as proof of your address for opening demat account.
Make sure the address on the POA matches with the address provided at the time of application.
4. Bank Documents:
A cancelled cheque or a bank statement showing your bank account details and IFSC code is required for linking your bank account with the demat account.
5. Income Proof:
Income proof is required for trading in deratives (futures & options). You might need to provide salary slips, IT returns, or bank statements as a proof of income.
6. Nomination Form (Optional):
If you wish to nominate someone to handle your investments in case of your absence, you can fill out a nomination form.
Make sure all the documents are self-attested and up to date. Once you have these documents ready, you can visit any of the stockbroker’s website like Zerodha, Upstox, 5 Paisa, Angel Broking, etc., to open the account.
See lessHow to Trade with Morning Star Signal?
How to Trade with Morning Star Signal Trading with the Morning Star Signal is a simple yet powerful strategy. The Morning Star is a bullish reversal pattern, indicating a potential upward shift in a stock's direction. Here are the 7 easy and practical steps to execute a trade using Morning Star SignRead more
How to Trade with Morning Star Signal
Trading with the Morning Star Signal is a simple yet powerful strategy. The Morning Star is a bullish reversal pattern, indicating a potential upward shift in a stock’s direction.
Here are the 7 easy and practical steps to execute a trade using Morning Star Signal:
1. Recognition of the Pattern:
2. Confirmation:
3. Entry Point:
4. Setting Stop-Loss and Book-Profit:
Stop-Loss: Don’t forget to put a stop-loss just below the low of the first bearish candle.
Note: No strategy in the market works all the time. You must keep the stop loss for every trade you execute.
Book-Profit: Set a target for at least 1:2 risk-reward ratio and book profit when the price hits the target.
5. Risk Management:
Only risk a small portion of your trading capital on a single trade, usually a small percentage like 1-2% per day doesn’t effect a lot.
6. Monitor Your Trade:
Watch the execution of the trade closely. If the price starts moving in your favor, consider adjusting the stop-loss to increase the profit.
7. Exit Strategy:
Every trader must remember that no strategy works all the time. It’s important to practice risk management, stay updated with market trends, and consider using technical analysis to confirm your trade decisions.
See lessWhat are the Topics Covered in “One up on Wall Street” Book?
7 Learnings from the Book Once Up on Wall Street The book "One Up on Wall Street" was written by Peter Lynch, it covers several key topics in a simple and insightful manner. The following are the key learnings from the book 1. Investing: The book begins by introducing the basics of investing, makingRead more
7 Learnings from the Book Once Up on Wall Street
The book “One Up on Wall Street” was written by Peter Lynch, it covers several key topics in a simple and insightful manner.
The following are the key learnings from the book
1. Investing:
The book begins by introducing the basics of investing, making it easier for beginners. It talks about how anyone can successfully invest in stocks without expertise.
2. Author’s Investing Philosophy:
The Author shares his investment philosophy, focusing on the idea that ordinary people can use their daily experiences and observations to make smart investment choices. We can learn a lot from our day-to-day activities.
3. Stock Selection:
Lynch elaborates on how to choose stocks wisely. He suggests looking for companies you understand and have faith in based on your everyday experiences.
4. Research:
The book explains the importance of doing thorough research before investing in any company. Understanding the financials and industry trends is very important before investing in any company.
5. Managing a Portfolio:
Lynch discusses portfolio management strategies, diversification, and balancing risk to optimize investment returns.
6. Success Stories:
Throughout the book, Lynch shares real-life stories of successful investors, providing practical insights into his approach. That inspires me a lot as a beginner.
7. Long-Term Perspective:
Lynch encourages readers to hold onto quality stocks and let them grow over time.
Overall, “One Up on Wall Street” is a great read for beginner investors, offering valuable lessons and a simple approach to successful investing.
See lessHow Nifty and Bank Nifty Index Value is Calculated?
What is Nifty & Bank Nifty The Nifty and Bank Nifty indices represent the stock market performance in India. They're calculated using a weighted average of the stock prices of certain companies. Nifty 50: The Nifty is a stock market index that represents the performance of the top 50 companies lRead more
What is Nifty & Bank Nifty
The Nifty and Bank Nifty indices represent the stock market performance in India. They’re calculated using a weighted average of the stock prices of certain companies.
Nifty 50:
The Nifty is a stock market index that represents the performance of the top 50 companies listed on the National Stock Exchange (NSE) in India.
These 50 companies are chosen based on certain criteria like market value (market capitalization) and the liquidity.
Imagine you have a basket, and each company’s stock is like a fruit. The bigger and juicier fruits (companies with higher market value) have a larger share in the basket. Smaller fruits (companies with lower market value) have a smaller share.
Now, let’s say you have 50 fruits in the basket. The juicier and more popular fruits (companies) will have a bigger impact on how heavy the basket is.
If the big fruits get juicier (their stock prices go up), the basket becomes heavier (index value increases). If the big fruits lose juice (stock prices go down), the basket becomes lighter (index value decreases).
Bank Nifty:
The Bank Nifty, on the other hand, is specific to the banking sector only. It represents the performance of major banking stocks in India.
The process of calculating Bank Nifty is quite similar to Nifty. You have a basket, but this time, it’s filled with the stocks of major banking companies. The bigger and more influential the bank (based on the number of shares and its value), the larger share it has in the basket.
So, when you see the Nifty or Bank Nifty index value go up or down, it’s like seeing how heavy or light the basket of fruits (stocks) has become. It gives us an idea of how well these important companies are doing in the stock market.
Based on the performance of these indices one can analyse the economic condition of the country.
See lessHow to Find a Perfect Stock?
How to Find Perfect Stock in India Finding a perfect stock is not a guarantee thing, but you can do proper analysis to figure out best stocks based on its past performance. Look for the companies in booming industries, like technology or renewable energy, as they often have potential. Check the compRead more
How to Find Perfect Stock in India
Finding a perfect stock is not a guarantee thing, but you can do proper analysis to figure out best stocks based on its past performance.
Look for the companies in booming industries, like technology or renewable energy, as they often have potential.
Check the company’s financial health by reviewing its profits, debts, and cash flow charts.
Also, assess the leadership and management team to ensure a company is in good hands. Proper leader will always a great asset to the company.
Diversifying your investments across different sectors can reduce risks.
Stay updated with market trends and news to take proper decisions.
Remember, there is no perfect stock in any market, all we can do is a proper research and hoping for the best.
As the stock market experts say, anything can happen anytime in the stock market.
See less