Equity trading is the buying and selling of company shares or stocks.
In sharemarket terms, equities is another word for shares and represents part-ownership of a company, as distinct from debt securities such as bonds and debentures.
Investment in shares of companies is investing in equities. Stocks can be bought/sold from the exchanges (secondary market) or via IPOs – Initial Public Offerings (primary market). Stocks are the best long-term investment options wherein the market volatility and the resultant risk of losses, if given enough time, is mitigated by the general upward momentum of the economy. There are two streams of revenue generation from this form of investment.
1. Dividend: Periodic payments made out of the company’s profits are termed as dividends.
2. Growth: The price of a stock appreciates commensurate to the growth posted by the company resulting in capital appreciation.
F & O
Future: A ‘future’ is an agreement to buy or sell a certain underlying asset at a fixed price and at a certain future date. The seller of a future has an obligation to deliver the underlying asset to the buyer, and the buyer has an obligation to pay the agreed price to the seller at a future date. A transaction involving the sale of stock futures is called ‘short future position’ and a transaction involving the purchase of stock futures is called ‘long future position’.
Option: An ‘option’ is a special type of future contract where the buyer has an option to buy or not to buy the underlying asset from the seller at a fixed price up to a certain date called ‘options expiry date’. However, the option seller (writer) has an obligation to deliver the underlying asset to the buyer. The buyer of the option pays an upfront fee/premium to the seller of the option. If the buyer does not exercise the option by the option expiry date, the option expires and has no value.
The future and option (F&O) market is a good investing or trading option for investors with a high risk appetite. The volatility in the markets creates many opportunities for speculative trading in the F&O market. The F&O market offers high returns as it is similar to leveraged investments. On the other hand, it comes with a high risk of loss of capital. Investments in derivative instruments magnify the returns and risk many times. Therefore, investors with a high risk appetite, good understanding and reach of stock markets only should look at investing in derivative instruments.
Commodity market is a place where trading in commodities takes place. It is similar to an Equity market, but instead of buying or selling shares one buys or sells commodities. Commodity market is a place where trading in commodities takes place. It is similar to an Equity market, but instead of buying or selling shares one buys or sells commodities.
When the economy is dipping, money is worth less – inflation occurs. The prices for commodities usually go up during high inflation;accordingly the price of raw materials also sees an upward trend.Therefore, a few commodities in your portfolio will help you benefit from this upswing and that is just one benefit of investing in comodities.
Initial public offering, or IPO, is the first sale of stock by a company to the public. A company can raise money by issuing either debt or equity. If the company has never issued equity to the public, it’s known as an IPO.
Why consider buying into a newly public company? For one thing, it’s a way to get in on the “ground floor” of a company if the investor believes it has long-term potential. If you think the company is going to perform well over the long-term, it may be cheaper to buy shares early on.