SHARETIPSINFO >> Articles Directory >>How to invest in shares and IPO in Indian stock market


There are in fact different ways to invest in the shares and no one other than you can say what the best way to trade is? This is simply because there are certain advantages and limitation of every possible methods of trading in stocks. Here we are presenting the most common and preferred ways of investing in the stocks.

For investing in the stocks you first of all need to have a DP account and a broker through whom you will buy and sell stocks at the stock exchange. You can also choose to do the trading online where you will have an online trading account through which you will execute the sell and purchase of the stocks. Let us give you an account of different ways to invest in the stocks.

Delivery Trading – Delivery trading or the cash segment is the most common form trading in the stock market. In this type of trading you have to pay for the entire value of the stock along with the brokerage while buying the stocks. Once your purchase request is settled through your broker the stocks are deposited to your DP account. Then you can sell the stocks or hold them till you want to hold them. The brokerage of the delivery based trading is higher than other forms of investment in the stock market but then you are free of any time limitations.

Day trading – Day trading or margin trading is a profitable way of trading in the stocks. In margin trading you can buy or sell stocks but you have to close the deal on that specific trading date before the market closes. That means whether you get profit or make loss from the deal you can not hold the stocks more than a day or more than a fixed time. The biggest advantage of day trading is that you can short sell the stocks to gain from investment even if the market or the stock is falling. Margin trading brokerage is also lower than cash segment and hence you can make more profit.

Derivative Trading – Derivative trading can be done through two most popular instruments – Future and Option. In derivative trading the stocks are bought and sold as a lot and you have to pay a part of the total valuation of the stocks while getting the Future or the Options contract. While Future is a contract between the buyer and seller to sell or buy the stocks at a particular future date, the option contract is made for buying or selling the stocks in a future date and at a specific price.

Unlike the already listed equities in the market investing in the Initial Public Offering or IPO is different. IPO is offered either by new companies or already existing companies who want to become public. Depending on the asset and valuation of the company and the number of stocks they are offering. Generally these calculations are done by the underwriters engaged by the company for issuing the IPO.

In most cases the investors have to pay the face value of the stock along with the premium price to get the IPO. In most cases you have to apply in the specific form with a part of the total value of IPO required for buying the stocks. Once the stocks are allotted to you have to pay the remaining amount. Then the IPO is listed in the stock exchange and you can then sell or hold the stocks according to your wish. Though there is more risk in investing in IPO as you will have hardly any information regarding the company. So while investing in any IPO you need to be all the more careful and do as much research as possible on the company and the sector as well. You should also take a note of the time of the IPO as well. If the general market trend is good and optimistic then it is most likely that the IPO will do better at that time. So take your investment decisions wisely for better results.

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