Trading
Trading involves buying and selling financial assets or goods with the aim of earning a profit from price movements
Share Market Trading Fundamentals
Build a strong foundation in share market knowledge, trading concepts, analysis, risk management and disciplined decision-making.
Key Learning Points
- What the share market is
- What a share represents
- Share market trading
- Trading vs investing
- Major types of trading
- NSE and BSE
- Demat and trading accounts
Market Analysis
- Market indexes
- Basic order types
- Fundamental analysis
- Technical analysis
- Trading plan
- Profit and loss calculation
Risk & Discipline
- Risk management
- Trading psychology
- Importance of a trading plan
- Major trading risks
- Capital protection
- Disciplined decision-making
What is the Share Market?
The share market, also known as the stock market, is a financial marketplace where shares of publicly listed companies are bought and sold.
When a company needs capital for business expansion, projects, technology, or other activities, it may raise funds by issuing shares to the public.
A person who purchases these shares becomes a shareholder of that company.
Major Indian Exchanges
NSE
National Stock Exchange of India
BSE
BSE Ltd.
What is a Share?
A share represents a small unit of ownership in a company. For example, if a company has issued 10 lakh shares and you own 1,000 shares, you own a small portion of that company.
What is Share Market Trading?
Share market trading involves buying and selling shares with the objective of benefiting from changes in market prices.
Understanding Gross Profit
A simple example showing how a price movement affects the gross trading result.
100
Shares₹200
Per Share₹230
Per Share₹3,000
Actual net result may differ after applicable brokerage, taxes and transaction charges.Trading vs Investing
| Trading | Investing |
|---|---|
| Often focuses on shorter-term price movements | Often focuses on long-term value creation |
| Positions may be held for minutes, days, weeks or months | Investments may be held for years |
| Technical analysis may be important | Fundamental analysis may be important |
| Generally requires active monitoring | Generally involves less frequent transactions |
| Risk management is critical | Diversification and long-term discipline are important |
Major Types of Trading
Intraday Trading
Buying and selling a position within the same trading day to participate in daily price movements.
Swing Trading
Generally involves holding a position for several days or weeks to participate in potential price movements.
Patterns • Trends • VolumePositional Trading
Holding a trading position for a longer period, often weeks or months, to participate in larger market movements.
Long-Term Investing
Holding shares for an extended period while considering business quality, growth, debt and valuation.
How Does the Indian Share Market Work?
Investor / Trader
Trading Account
Broker
Stock Exchange
Order Matching
Settlement & Demat
Demat Account
Used to hold securities electronically.
Trading Account
Used to place buy and sell orders.
Bank Account
Used to transfer funds for transactions.
NSE & BSE
National Stock Exchange — NSE
NSE is one of India's major stock exchanges and operates an electronic, order-driven trading system.
NIFTY 50BSE Ltd. — BSE
BSE is another major Indian stock exchange.
SENSEXWhat is an Index?
A stock market index tracks the performance of a selected group of stocks.
Indexes can help investors and traders understand the performance or general direction of a market segment.
Understanding Trading Orders
Market Order
An instruction to buy or sell at the best available market price.
Limit Order
An instruction to buy or sell at a specified price or better.
Stop-Loss Order
An order or trigger designed to help manage potential losses when the market moves against a position.
Fundamental Analysis
Fundamental analysis evaluates the underlying business and its financial condition.
Technical Analysis
Technical analysis studies market price and trading activity to identify potential patterns, trends and market behaviour.
Risk Management
Understanding and managing risk is an essential part of responsible trading.
Protecting capital is an essential part of responsible trading.
Trading Psychology
Trading is not only about charts and numbers. Human emotions can strongly influence decision-making.
Fear
Greed
FOMO
Overconfidence
Revenge Trading
Impulsive Decisions
Patience
Discipline
The Role of a Trading Plan
A trading plan provides a structured framework for decision-making.
Market Selection
Which market or securities will be considered?
Entry Criteria
What conditions must exist before entering?
Position Size
How much capital will be allocated?
Stop-Loss
Define the point where the trade thesis fails.
Target / Exit Strategy
Define when and why the position will be closed.
Risk Limit
Define the maximum acceptable loss.
Review
Review whether the trade followed the plan.
Basic Profit & Loss
Profit/Loss = (Exit Price − Entry Price) × Quantity
₹100
₹110
100
Gross Profit
₹1,000
Applicable transaction costs, taxes and charges should also be considered when calculating the actual net result.
Important Risks of Trading
Share market trading involves risk, and invested capital is not guaranteed.
Market Volatility
Sudden Price Movements
Company-Specific Risk
Economic Risk
Liquidity Risk
Leverage Risk
Emotional Decisions
Overtrading
Inadequate Knowledge
Trading Learning Framework
A structured learning approach designed to develop market knowledge, analytical thinking, risk awareness and disciplined decision-making.
Market Knowledge
Fundamental Analysis
Technical Analysis
Risk Management
Trading Psychology
Disciplined Trading
Learn → Analyse → Practise → Manage Risk → Develop Discipline → Review → Improve
Learn the Market. Trade with Discipline.
Share market trading is not simply about buying at a lower price and selling at a higher price. Developing trading skills requires knowledge, analysis, risk management, discipline, practical application and continuous learning.
MY BUSINESS focuses on developing a structured decision-making process and a realistic understanding of market opportunities and risks rather than encouraging individuals to chase quick profits.
“Learn the Market. Analyse the Opportunity. Manage the Risk. Control the Mind. Trade with Discipline.”
Educational Disclaimer
The information provided by MY BUSINESS is intended for educational and informational purposes. Trading and investing involve market risk, and past performance or educational examples do not guarantee future results. Individuals should understand the risks involved and make decisions based on their own circumstances and appropriate professional advice where required.