Monday, 25 August 2014

Insider Trading and Formulation of New Rules to Curb it.



Insider trading is considered an unethical practice as it involves selling the stocks and securities of a public company by a person who has the access to the non-public information about the company. It is grossly unfair to other investors who do not have access to such information. Insider trading tends to raise the cost of stock tips and thus triggers economic slowdown. Insider trading for employees are allowed in some places as long as it is not based on information that is not under public domain. Insider trading is even considered illegal in many countries. It is not that only the director of a company can be convicted of insider trading; broker and family members too who have utilized the exclusive information can be convicted. If the information that has been utilized for insider trading becomes public, it is no longer considered as illegal. It is, however, possible for insiders to trade but only through information which is in the public domain.

Insider trading simplified

Insider trading refers to the act of performing a trade based on information that is not publicly available. Such an act is considered illegal, as well as unethical, and is punishable under the Prohibition of Insider Trading Regulation Act, enacted by SEBI all the way back in 1992. Company executives often have advanced knowledge of the decisions that a business is going to take, and can predict whether the prices of the best share tips will rise or plummet as a result. This information cannot be made available to the general public, and since market share trading should be  performed only on the data that everyone can have access to, the SEBI made insider trading illegal. For close to 2 decades, only the executive level officials of a business were considered insiders, but the SEBI made a revision in the law in 2013, that now includes all officers who have access to unpublished classified information. This new change is expected to curb insider trading in India considerably and will make the act punishable for people who could earlier get away with it. 

Closing in on inside traders

SEBI has gone to great lengths to ensure that there are no loopholes that allow insider trading. Not only are the executives and upper tier employees of a company who potentially have access to insider information required to provide their trading plans in advance, relatives and professional contacts of these individuals are also covered by the purveys of the insider trading prohibition law.
The regulations also include a clause that requires every listed company to create a code of conduct. This is applicable to market intermediaries as well, and all such organizations are required to put in place a system that monitors its employees for such activities. Similarly, trades performed by company stakeholders and their families will need to be evaluated and verified by the company, and hence all trades must be internally submitted to the company for verification.

These steps, and more will hopefully curb the demon of insider trading in India, and give market traders a fair chance to conduct their business.

Wednesday, 13 August 2014

Day Trading Strategies in Current Indian Market

Day Trading, as the term implies, refers to the practice of completing both buying and selling Free Stock tips in a single trading session/day. In this the basic principle is that of an immediate view avoiding the likely tremors of overnight newsflowsimpacting the stock prices. Since both buy and sell is concluded in a single session the fundamental analysis has little relevance in this style with the emphasis being on the trend, market sentiments and technical analysis.

Short Selling in Day Trading Strategies
 
Traders, depending on market trends, often indulge in Short Selling. This is a practice in which traders opt to sell first and buy later. Short selling has been a frequently used strategy in Day trading. Several indicators in intra day market trends encourage traders to adopt short selling. For example, if the Opening price and the Day High Price of a particular Best Free Stock Tips Provider is identical, then the trend of that stock is downwards and it can be short sold for the day to make money. Alternatively, if the Opening Price and Day Low of a stock is identical, then the trend of that stock for that day would be a rising one and trader should have a long (i.e Buy) position on that to make money.

Understanding Market Trends for Short Selling 
 
In case the trend is negative for a particular session, traders may opt for Short Selling. Through short selling, therefore, traders often capitalize on the falling trend. In case the trend looks positive, then the conventional method of buying first and selling later is used. Both these methods can be used because the trade is settled at the end of the session without levying any future obligation on either the buyer or seller.

In order to generate volumes and encourage traders, the brokers provide what is known as Exposure on the available Cash Balance of the trader. This basically means allowing the trader to transact with more funds than he has. The Industry average of this is around 10 times the available cash balance. However, this may vary depending on three conditions, namely,
  • Market conditions
  • Brokers requirement for business
  • Client rapport
  • Requirement available to the broker

Commonly known as Intra-day or speculation trading, the brokerage and statutory dues in Day Trading are much lower as opposed to the conventional delivery model. In the latter, the client buys the Best Stock Tips fully with his own funds and holds it till he gets a good price.

Analyzing Market Situation for Short Selling
 
This is applied when there is uncertainty and volatility prevalent in markets created by political and social situations. A case in point could be the situation created prior to the new BJP Government coming to power.Charting and technical analysis like the head and shoulder pattern, candlesticks, bar charts, etc.can be used to understand the probable trading pattern in the next few hours and plan strategies to profit from the same. This is possible because the trade is settled at the end of the session without any obligation on either the buyer or seller in the future

There are some clients who are compulsive traders who indulge in short selling to enjoy the throbbing market pulse. However, more often than not they end up losing money because of the short time span that they have at their disposal to predict and time the markets.

Saturday, 9 August 2014

Catching the market trend to earn more from share trading



Making a profit in share trading requires a thorough knowledge of how it works and what factor influences it. Experience and skills have no substitute in share trading and one must learn to assess the market condition to be able to be able to use them to the advantage. The traders should also be well versed with the terminology and jargon's used in the share market to effectively communicate with the brokers and advisory companies. If the trader is able to understand the market trends, it will be easier for him to predict the prices of shares and upcoming market conditions more accurately and precisely. It is advisable to follow the trend of the market and trade as per it to register high profits. Analysis of the market trend is carried out by mapping the historical data about the market on a 2 dimensional graph and by looking at it, one can easily understand the pattern of the fluctuation. Share market tips come in handy when the person is new to trading. This is called technical analysis of the market and is performed with the help of software tools. Free Stock tips that have good volume and volatility is more likely to give profits. The high volatility of a stock is indicated by the fact that it rises by more than 1 % when the index rises by 1%. In case of intra-day trading, apart from identifying volatile stocks, fixing a strict stop-loss is equally important. Many such share tips and stock market tips should be sought before actually start trading.


  • Pre-market information is the condition of the market before opening up in the morning.
  • Market trends can also be predicted by fluctuation of the price of crude oil and gold.
  • Best Stock tips from trusted sources help in reading the pattern of the market.
Common market trends and their impact

The traders must devise their strategies according to the ongoing market trends and also try to predict the future trends according to the historical data. Short selling is often made by the traders where they sell borrowed shares. Practiced generally by seasoned traders, short selling is motivated  by the belief that a share's price will decrease in future.

  • Bullish trends: Bullish trends signifies an upward trend in the market. When the price of stocks of an industry rises and it also shows on the broad indices like Sen-sex and nifty, the market is said to be experiencing a bullish trend. The bullish trend in the market also manifests the buyer's confidence in the market. When such a trend follows a low period, it indicates the recovery of the economy. The name of the trend is the metaphor for the action of the bull, as it runs fast.
  • Bearish trends: Bearish trend is the paradox to Bullish trend. When the price of any industry's stocks declines sharply and it also reflects in the broad indices, i.e. Nifty and Sensex, the market is said to be experiencing a bearish trend. It is characterized by the lack of confidence about the market among the buyers. When the price fall in the stocks is in tune of 20%, it is indicative of Bearish trend.