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Share Trade.
The share market, or stock market, can be broadly categorized into primary and secondary markets, with the primary market being where companies issue new shares for the first time (like IPOs), and the secondary market where investors trade existing shares.
Definition:
The primary market is where companies issue new shares to the public for the first time, also known as an Initial Public Offering (IPO).
Purpose:
Companies use the primary market to raise capital by selling shares to investors.
Example:
When a company goes public, it issues shares in the primary market, allowing investors to buy these shares for the first time.
Definition:
The secondary market is where investors trade already issued shares among themselves.
Purpose:
Investors can buy or sell shares from other investors in the secondary market.
Example:
Once a company's shares are listed on a stock exchange, investors can buy and sell those shares in the secondary market.
Key Players:
Investors: Individuals or entities who buy and sell shares.
Traders: Individuals or entities who engage in frequent buying and selling of shares.
Stockbrokers: Professionals who act as intermediaries between buyers and sellers.
Stock Exchanges: Platforms where securities are traded.
Regulators: Government bodies that oversee and regulate the share market.
Share trading involves various strategies, from short-term intraday (day) trading and scalping to longer-term swing and position trading, each with different timeframes, risk levels, and potential rewards.
Here's a breakdown of common types of share trading:
Intraday (Day) Trading:
Buying and selling stocks within the same trading day, aiming to profit from short-term price fluctuations.
Scalping:
A type of day trading that involves making numerous small, quick trades to capture tiny price movements, often holding positions for only a few minutes.
Swing Trading:
Holding stocks for a few days or weeks, aiming to profit from short-term price swings and trends.
Position Trading:
Holding stocks for longer periods, often months or years, based on a long-term outlook and fundamental analysis of a company.
Momentum Trading:
Identifying and capitalizing on the momentum of a stock, buying when it's trending upwards and selling when it's trending downwards.
Algorithmic Trading:
Using computer algorithms to automatically execute trades based on predefined rules and strategies.
Fundamental Trading:
Making investment decisions based on a company's financial health, industry analysis, and economic factors.
Technical Trading:
Using charts and technical indicators to identify patterns and trends in stock prices to make trading decisions.
Delivery Trading:
Buying shares and holding them for an extended period, potentially for years, according to Angel One.
Primary and Secondary Markets:
The primary market is where companies issue shares for the first time, while the secondary market is where these shares are traded after the initial offering.
Arbitrage and Speculation:
Arbitrage involves profiting from price differences of the same asset in different markets, while speculation involves taking positions based on anticipated price movements.
Social Trading:
Following and replicating the trades of other successful traders.
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