Some Basic Information on Trading and Investing

What is an Index ?

NIFTY and SENSEX are the Index , they are the indicator of how Markets are performing . An Index is created for measuring a particular section of stocks . When the Index goes up or down , they represent the group of Stocks they comprise of . So if an Index is up you can say with high probability that most of the stocks under them have done well .
What is Nifty and Sensex ?

There are many Stock Exchanges in INDIA , BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) are most famous and biggest of all and with maximum business happening there .

Nifty : Nifty is the Index of NSE . Nifty has 50 biggest companies of India representing the companies from almost all of the sectors , Each stock has there own weightages. Like Reliance , Infosys have High Weightage and Ranbaxy has less .

Sensex : Sensex is a Index of BSE , It is comprised of 30 shares .

What are different Indices on Exchanges ?

There are different kind of Indices on Stock Exchanges like for NIFTY .
NIFTY : Basket of all the sectors , Represents all the whole Economy CNX IT : For IT stocks CNX 100 : Top 100 Stocks CNX MIDCAP : For Midcap Stocks BANK NIFTY : For Banks

Each Index represents a sector or a group , if you track a Index you can understand how the sector is performing overall .

What is difference between a Trader and Investor ?

Trader : A Trader is a person who tries to earn profit from small movements in price , there time horizon is very small like 1 day or a week or some weeks . For example , A trader will buy something @100 and will sell it at 105 and make a profit of 5 . He will try to take advantage of volatility . His main tools will be Charts , News , sector outlook for short term etc. He will not concentrate much on Company fundamentals , Long term sector outlook .

Investor : A Investor is someone who tries to invest money for long term . Long term can be anything from 1 year to 10-15-20 years . Investor is more concerned about the fundamentals for the companies , its growth and factors like those which are going to drive the share price in long term not short term … Investor is not concerned about the short term volatility . There focus is long term .

How to Begin Trading ?

Trading is one of the toughest things to master . Its a better idea to first learn and read about Trading for some months , Watch the markets for some months and try to paper-trade first . paper trade means just trading on paper and seeing how you perform . Read about Technical Analysis also . Try to gather more and more info on Trading . Read good Books and Learn as much as you can .

Knowledge and your intelligence has very less contribution in your success as Trader . The main things are Money Management , Discipline , Control over GREED And FEAR , and Risk Management .

Once you are very confident you can start , Start with very small Cash and take big bets only when you have made some progress to cheer about .

Have a plan and targets for your Trading . Take Trading seriously as your business and not as hobby , else with high probability you will Fail .

How to Begin Investing ?

Read How to analyse stocks and Read books . Have a long term horizon and don’t be afraid of your share coming down …

Should you be a trader or an Investor or nothing ?

It depends on your personality , the time you want to give in this and your goals . IF you find fun with dealing in markets in short term basis , Be a trader.

If you can devote time to markets in daily or weekly basis , then you can be an Investor .

If you are not interested in Either , just don’t be anything .. Do what you are doing right now

It was a fast written post , I hope thing are clear .