Equity Trading: Here's everything you must know

06 Dec 2021|

1 min read |

by ICICI Securities Team

Introduction

Equity Trading primarily deals with buying and selling of shares of a company. These shares get traded publicly or privately, based on whether the company is a listed entity. The Share Market is populated with shares of different companies that traders buy and sell depending on their research and choice. However, be careful while navigating through the Share Market trading as there are many intricacies attached to it.

Understanding the basics

Equity implies ownership. If you hold shares in, say, company ABC Ltd, it means you have a certain level of ownership of that company. Along with an inherent sense of ownership, you can take advantage of Equity Trading if you believe that a specific company share will appreciate significantly and earn your investment and more.

How does Equity get traded in India?

Equity trading mostly takes place on stock exchange platforms. The National Stock Exchange and the Bombay Stock Exchange are the two biggest stock exchanges. In this tech-driven world, the tools needed to engage in Share Market are only a few:

A Demat and Trading account
Knowledgeable broker for facilitating your transactions
Decent online trading platform
Internet connection to access the live Share Market

Essentials for success in equity trading

People are lured into Equity Trading with the idea of making lots of money through investing in the stocks of successful companies. However, this does not necessarily always hold. Equity Trading is a complex, thought and research-driven exercise which requires in-depth analysis such as:

Fundamental Analysis: Through this, you can analyse a company's stock value as a resultant effect of varying underlying factors. The fundamental analysis explores these underlying factors and draws prospects of the company and its corresponding stock's value.

Technical Analysis: This is a relatively specialised technique as compared to fundamental analysis. It aims to study and draw inferences from the Share Market movement to predict the company's stock value. It uses charts and other tools to gauge future price movements of stocks and take trading positions accordingly.

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What is equity | Equity trading strategies | Equity trading in ICICI Direct | ICICI Direct

The pros and cons

Equity Trading comes with a set of benefits and drawbacks:

Benefits

Easy entry & exit: The Share Market is enormous, and you mostly always have takers and givers for shares you wish to trade.

Wealth creation: Through dividends and capital growth of your chosen company's stock, you can look to build your corpus.

Drawbacks

Volatile: There is no guarantee of which direction your chosen company's share value will move in. Also, there is a possibility of significant losses.

No Fixed Returns: Unlike a Debt instrument, Equities do not offer any fixed timely returns and hence cannot be relied upon for a regular stream of cash inflow.

Conclusion

The Share Market is not for the faint-hearted. Your golden rule is to think before trading. The dynamics of demand and supply apply here, deciding the value of your intended company's shares. But if you stick through and indulge in fundamental research before Equity Trading, the results can surprise you.

Disclaimer

ICICI Securities Limited has its registered office at ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400025, India, Tel No:- 022 - 2288 2460, 022 - 2288 2470. The non-broking products / services like iLearn and Financial Learning are not exchange traded products / services and ICICI Securities Ltd. is just acting as a distributor/ referral Agent of such products / services and all disputes with respect to the distribution activity would not have access to Exchange investor redressal or Arbitration mechanism. iLearn is not an exchange traded product/service of ICICI Securities Ltd. All disputes with respect to the activity on the platform would not have access to Exchange investor redressal or Arbitration mechanism.

ICICI Securities Ltd. is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and having SEBI registration no. INZ000183631. ICICI Securities Ltd. is a SEBI registered with SEBI as a Research Analyst vide registration no. INH000000990. Name of the Compliance officer (broking): Mr. Atul Agrawal, Contact number: 022-69997051, E-mail address: complianceofficer@icicisecurities.com Investments in securities markets are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. ICICI Securities Ltd. and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Such representations are not indicative of future results. The securities quoted are exemplary and are not recommendatory. AMFI Regn. No.: ARN-0845. PFRDA registration numbers: POP no -05092018. ICICI Securities Ltd. acts as a Composite Corporate agent having registration number -CA0113. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Please note, Mutual Fund, Corporate Fixed Deposits, Bonds, Alternate investment funds, Tax planning, Succession planning, NPS, IPO, Investment Advisory and Loans related services are not Exchange traded products and ICICI Securities Ltd. is acting as a distributor to solicit these products. Please note, Insurance related services are not Exchange traded products and ICICI Securities Ltd. is acting as a corporate agent to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The non-broking products / services like Research, etc. are not exchange traded products / services and all disputes with respect to such activities would not have access to Exchange investor redressal or Arbitration mechanism. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.

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