Finance

What Are The Important Points In Equity Trading And How To Do it Over The App?

Holding shares of a company represents a part of the company’s ownership, which is transferable in the secondary market on stock exchanges. You can take advantage of Equity Trading to make significant profits with prudent decisions. Equity Trading refers to buying and selling shares of listed and unlisted companies. 

The share market is populated with thousands of companies. Individuals select stocks based on their research. People need to be careful while taking the route of share trading as there are many intricacies to consider.

Important Aspects to Consider While Trading Equity 

Risk Involved 

Stock markets are risky, and you need to understand the risks involved in equity trading. 

  • Market risk: The profit or loss depends on the stock price ups and downs, and stock prices fluctuate every moment. 
  • Company risk: Ups and downs in a company impact its stock price and thus, trading equity. If the company’s performance is good, investors can get significant returns in the short-term and long-term as well. In contrast, the stock price can decline if a company’s revenue declines. 
  • Regulatory risk: Companies are listed on the stock market spread across various sectors – telecom sector, energy sector, financial services sector, pharma sector, etc. Different sectors get affected by regulatory changes in different manners. 

Other risks can also impact your trading decisions – inflation risk, political risk, economic risk, and others.

Analysis

Equity trading lures individuals to make profits with the growth of companies. It is a complex and research-driven exercise that requires in-depth analysis. Traders need to complete fundamental and technical analysis. 

  • Fundamental Analysis

Fundamental analysis involves analysing a company’s stock value based on different factors. It scrutinises a company’s financial strength and value, its management values, earnings, assets and liabilities. 

  • Fundamental analysis, basically, helps to evaluate securities and measure their intrinsic value. A company with strong fundamentals can survive in adverse economic situations.
  • The stock price is determined primarily by fundamentals – earnings (Earnings per share) and dividend per share. Earnings per share (EPS) is one of the accounting measures for earnings base. The earnings power also depends on the organization you are considering investing in. 
  • Technical Analysis

Technicals may be complicated for newbies. Technical analysis is primarily associated with trends in the market, recognizing patterns, and predicting stock movements. It is related to the history of stock regarding momentum on stock exchanges, chart patterns, and behavioral aspects of traders. It helps traders to decide on the price and volume to consider in a volatile market. Technical analysis can also be decided as a mix of external conditions that affect the supply and demand of a stock traded on the exchange. Let us elaborate on a few technical factors.

  • Liquidity: Liquidity is crucial in expressing whether a stock can attract investors. Stocks responsive to news are highly liquid. The stock of a small-cap company, typically, is less liquid. Large-cap stock investors enjoy high liquidity as they keep in demand heavily. 
  • Trends: A stock action depends on a trend, primarily a short-term trend. Reverse trends also matter for a stock action. Therefore, if the stock is trendy, you cannot predict the future accurately. It requires your experience in the market.
  • Inflation: Inflation is a significant driver from a technical analysis perspective. Low inflation results in high multiples in stock valuation. 

How to Trade Equity Over the App

Using Demat and trading accounts, you can trade equities over a mobile trading application. Stock trading applications are technology driven and have made it easier to trade equity anywhere. Most stock brokerage firms offer mobile trading apps in India to their clients. 

You can access the online trading platform and application of a stockbroker with a trading account. Once you have opened a Demat account and trading account with a broker, you can log in to the app to trade equity and other financial instruments.

Stockbrokers provide real-time information on stock markets. Traders can track market trends that they can capitalize on to benefit from the stock market.

You can use a trading app protected by several layers of security that can ensure safe trading on your smartphone. Consider a reputed discount broker to trade affordably with their unique subscription-based trading plans.

Read also: Benefit From Linking Your Savings Account With Demat Account

Williumson

Kate Johnson is a content writer, who has worked for various websites. She is also a college graduate who has a B.A in Journalism.

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