In recent times, There is a lot of buzzing around the concept of “Investment”. The idea of investment has evolved to a great extent and paved the way to access various investment opportunities at the fingertip. Over the time, People have moved their savings from investing in Fixed deposits to investing in new age financial products like stocks, forex and many more with the expectations of higher return.
Why to trade in financial markets?
2A.Difference between trading and investing: One of the major differences between investing and trading is that investing means holding on to the asset for a long period of time whereas trading could be anywhere from a few seconds to months. One can be a part of the economic growth of the country by investing and taking advantage of the increase in corporate earnings,
The stock market is a place where buying and selling of shares takes place. These shares are issued in the primary market and then traded in the stock market. It helps a company to raise capital or fund for their business and also provides an opportunity for the investor to be a part of it and receive capital gain on the same.
Derivatives are the security contracts where the value of the contact depends on the underlying asset. Majority of the derivatives are leveraged and hence involve high risk and high reward. There are two types of Derivatives: Futures and Options. Futures is a contract entered by an individual to buy or sell the asset at a predetermined future date.
Analysis of Trading
Fundamental analysis involves research and analysis on the true value or fair pricing of the company. This can be done through various methods such as financial statement analysis, macroeconomic analysis, comparing the earnings and valuation with its peers and other economic conditions. Ratio analysis is a key part of fundamental analysis.
Neurofinance is an emerging research about the influence of emotional intelligence in investment decisions. This research is also linked with behavioral finance to understand the psychology of the trader and what leads to market abnormalities. Trading psychology eventually develops with more experience and knowledge but even in the essential stages makes up a huge part of trading.