10 WAYS TO MAKE PROFIT FROM SHARE MARKET
In this blog, we are sharing the 10 ways to make a profit from the share market. This blog is designed for newcomers to the share market and trading. We can divide the 10 ways into 2 categories, first categories are an investment, which means buying the stock and holding for a long time with the hope of an increase in the capital value and the second method is trading, which means buying and selling of the shares in a short time, without taking the delivery of the stock to our Demat account.
Let get started with different ways to make the money.
First, we can see the 5 months of money-making through investments in the share market.
1. Capital appreciation :
Capital appreciation is of 2 types Long term and Short term. If appreciation happens in less than 1 year it is a short team capital gain and else it is long-term.
- It is an increase in the price or value of assets.
It may refer to the appreciation of company stocks or bonds held by an investor, an increase in land valuation, or other upward revaluation of fixed assets.
A dividend is a profit distribution payment made by a corporation to its shareholders.
- Divided will payout yearly or quarterly as per the company policy and it will directly be credited to the linked bank account.
- Some companies provide the dividend to their shareholders a higher amount than a bank deposit interest rate.
3. Bonus Share & Stock split
- A stock split is the same share divided into two or more shares as per the ratio
- A bonus issue is an additional share that is given to the existing shareholders.
The initial public offering is a process in which shares of a company are sold to institutional investors and to retail investors. An IPO is underwritten by an investment bank, to be listed on one or more stock exchanges.
- Stock buybacks refer to the repurchasing of shares of stock by the company that issued them.
A buyback occurs when the issuing company pays shareholders the market value per share and re-absorbs that portion of its ownership that was previously distributed among public and private investors.
Now, we can see the next 5 months of money-making through trading in the share market.
6. Intraday trading
Intraday trading deals with the buying and selling of stocks on the same day, during the trading hours that are stipulated by the exchange. Stocks are bought and sold in large numbers strategically with the intention of booking profits in a day.
BTST (Buy Today, Sell Tomorrow) is a facility that allows customers to sell shares before they are credited into a Demat account or take the delivery of shares. The decision has to be made in 2 days.
8. Short sell Trading.
A short sell is a transaction in which the seller first sells the stock he does not actually own and borrows it later on the same day. In reality, we can execute the short sell order through broker /dealer only and the seller has the obligation to buy back the stock at some point in the same day/future. Short sales are margin transactions.
9. Swing trading & Position trading
Swing trading is a style of trading that attempts to capture gains in a stock over a period of a few days.
Swing traders primarily use technical analysis to look for trading opportunities. Upward and downward “swings” in the price of a security help the trader to book a lot of small wins that help to make a significant return.
- The difference between position trading and swing trading is the amount of time involved between buying a stock and selling it.
10. Futures and options
- A future is a right and an obligation to buy or sell an underlying stock at a predetermined price and deliverable at a predetermined time.
- Options are a right without an obligation to buy or sell equity or index.
A call option is a right to buy while a put option is a right to sell.
Futures contracts have the buyer obligated to honor the contract, whereas, in the options contracts, there is no obligation on the buyer to buy or sell.
The above mentioned are the 10 ways to make the money from the share market domain. If you would like to share any further ways, please comment on the comment line for the reference of other readers.
Before start investment and trading, it is advisable to understand the concepts in the share market and trading. Once we understand it will be easy for everyone to start trading and make money from the share market.
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