Chitresh Panchal

Stock exchange is a body which act as a mediator and facilitates buying and selling of shares for execution of their respective orders. Some of the well known exchanges are BSE, NSE, NYSE, NASDAQ etc. For trading any stocks on exchange the company must first get listed on that exchange

Shares are the smallest unit of ownership in any enterprise that provides proportional distribution of any profit (if declared) in the form of Dividend.  The two main types of shares are common shares and preferred shares. Preferred shareholders have a bigger claim on company's earnings and assets. Also, they get preference over common shareholders when dividends are distributed. Generally, dividend for preference shareholders is more than that for the common shareholders. Earlier, shares were issued in physical format. However, now physical paper stock certificates have been replaced with electronic recording of stock shares, just as mutual fund shares are recorded electronically.

Companies issue shares to meet their financial requirements for expansion of business and other purposes. By issuing the shares company gets funds from public and other financial institutions. In return of investment, shareholder gets ownership of the company in the form of share

People buy shares because they are looking for better returns on their investments as compared to traditional products like bank FDs, PPF etc. They believe in growth prospect of a company in which they invest.

You can trade in following ways in the market: Intraday trading: In intraday trading, the position must be squared-off on the same day on which it's created. Positional Trading/Investing: In positional trading/investment, the trader/investor carry the trade overnight. He can hold the trade/investment for a couple of days or stay invested for long period.

Volume refers to the number of shares or contracts traded in any security in that particular period or time frame.

A Dividend is a pay-out to the shareholder from the profit of the company. When a company earns a profit then it will pay a proportion of that as a dividend to shareholders. Distribution of dividends will be in a various form like cash or in form of shares (if a company has a dividends reinvestment plan)

A dividend is a reward given to shareholders for owning stock in the corporation. It is key to attract people to invest in their company or buy a stock

In early days of stock markets, dividends were the primary method of calculating the return value to shareholders. Price appreciation was considered more of a bonus, as people bought stocks mainly because of their sizable dividends. In more recent times, dividends have come back into vogue. For the past five years, dividend stocks have easily outpaced the price performance of non-dividend stocks

If you buy a dividend-paying stock and meet the eligibility requirements (determined by its dividend dates), you'll receive dividend. The dividend pay-outs are issued on a per-share basis. For example, if an investor purchases one share of stock XYZ, which pays 1 Rupee quarterly, the investor will receive 1 Rupee for each share he or she owns, four times per year. Dividends are most commonly deposited into a shareholder's brokerage account. However, if an investor buys shares directly from a company itself (through a direct investment plan like a DRIP, for example), then the dividends can be automatically reinvested to buy more shares. Investors may also choose to have dividend cheques mailed to them. Here are a few suggestions:

What is your reason for investing? If you would like to receive regular income while you invest then you should invest in stocks that have a track record of regular dividend payment. If you pursue a purer value orientated strategy then dividends are not so important. However, in some cases, a lack of dividend may alert you to a value investing opportunity.

A company's ability to pay a dividend depends on its ability to continue making profit. But because the future is unknown, check the dividend payment history of a company going back as far as records go. If you can't be bothered with that, check at least 10 years' worth of dividend payment history.

Dividends can only be paid when a company is in good financial shape and management is willing to pay a dividend. Use screeners to check whether a company pays dividend whilst taking account of the health of their finances.

Security market is where securities are issued and traded. It is the market for different types of securities namely: Debt, Equity and Derivatives.

Debt market is divided into three parts:

• Government securities market
• Money market
• Corporate Debt market

Equity market is divided into two parts:

• Primary market
• Secondary market

Derivatives market is also divided into two parts:

• Options market
• Futures market

• For investors in cash market to hedge their positions
• Enhance price discovery process
• Increases volume of transactions
• Lower transaction costs
• Increased liquidity for investors and growth of fund flow from savings
• Leads to faster execution of trades and arbitrage and hedge against risk

Beta is a way of measuring systematic risk of any asset. It shows how price of a security responds to changes in its respective index price. Beta is a way of measuring systematic risk of any asset. It shows how price of a security responds to changes in its respective index price. It indicates the extent of movement or price of a stock with respect to the movement of index in market. Assets that are riskier than average will have Beta greater than 1 and assets that are safer than average will have Beta lower than 1. Risk-free assets will have a Beta value of 0.

A Stock market index is a measure of relative value of group of stock or a numerical representation of the value of group of stock. Stock market indices are used to measure the general movement of stock market. Indices are the plural form of index.

Bombay Stock Exchange (BSE Sensex) was started in 1986 whereas National Stock Exchange (NSE Nifty) started in 1995. The base year for Sensex is 1978-79 and base value is 100 whereas the base year for nifty is 1994 and base value is 1000.

• BSE consists of 30 scrips whereas NSE consists of 50 scrips
• BSE is screen based trading whereas NSE is national, computerized exchange
• BSE has adopted both quote driven system and order driven system whereas NSE has opted for an order driven system

Primary Market – It is also called new issues market as securities are issued to public for the very first time. In this market, new issues are made in following four ways:

• Public issue
• Rights issue
• Private placements
• Preferential allotment

Secondary Market – All the issued securities are traded in the secondary market. Stock exchanges are an important part of capital market.

• It is important to spend time in researching and learning about trading, even when a broker is handling your trading account. It requires   knowledge, discipline and time.
• Ready to lose money is to take risk. If you are not ready for taking risks, then equity trading is not suitable for you
• Always trade with Stop Loss (SL)
• If you are running into heavy losses or the market is not performing as expected than cut losses and stop for the day
• Don't be foolish to turn profits into losses, consider selling some of your stocks to a level & adopt the trailing stop loss strategy to reduce your   losses