Short term / Long Term Investment
- In delivery-based investing, you buy and hold stocks for more than one day with a short term / long-term perspective.
- Unlike intraday trading, where stocks are bought and sold on the same day, delivery trading allows investors to take ownership of shares.
- The main goal is capital appreciation over time rather than short-term gains.
- Suitable for investors who want to build wealth steadily by holding quality stocks.
- Stocks purchased under delivery trading are stored in the investor's Demat account until they decide to sell.
Investment Techniques
Fundamental Analysis
Fundamental analysis helps investors determine the intrinsic value of a stock by evaluating financial and economic factors.
- Company Financials – Analyzing balance sheets, profit and loss statements, and cash flow.
- Earnings Growth – Companies with consistent earnings growth are preferred.
- Industry & Market Trends – Understanding how the company performs relative to its competitors.
- Management Quality – A strong and experienced management team increases confidence in long-term growth.
- Economic & Sector Conditions – Macroeconomic factors like inflation, interest rates, and GDP growth impact stock performance.
Technical Analysis
Technical analysis focuses on price movements and trading patterns using charts and indicators.
Key aspects include:
- Candlestick Patterns –Helps identify market sentiment (e.g., Doji, Hammer, Engulfing patterns).
- Trend Analysis – Identifying uptrends, downtrends, or sideways movements.
- Industry & Market Trends – Understanding how the company performs relative to its competitors.
- Indicators & Oscillators – Using tools like Moving Averages, RSI (Relative Strength Index), MACD (Moving Average Convergence Divergence) for trading signals.
- Volume Analysis - Understanding the strength of a price movement based on trading volume.
Intraday Trading
Intraday trading refers to the buying and selling of securities within the same trading day. Unlike short term / long term investing where stocks are held for the long term, intraday traders aim to profit from short-term price movements. Since positions must be squared off before the market closes, traders do not take actual ownership of the stocks. This form of trading is highly speculative and volatile, requiring a deep understanding of market trends, technical indicators, and quick decision-making.
Intraday trading is considered risky because prices fluctuate rapidly within a short period, and traders must act swiftly to capitalize on these movements. Additionally, many brokers offer margin trading, which allows traders to buy stocks with borrowed funds, amplifying both potential gains and losses. Due to these factors, experience plays a crucial role in intraday trading. Successful intraday traders use various technical analysis tools, such as candlestick patterns, moving averages, and volume indicators, to make informed decisions. However, due to the fast-paced nature of the market, even experienced traders face the risk of losses if trades are not executed carefully.
Futures Contracts / Commodities Trading
MCX (Multi Commodity Exchange) is a leading commodity derivatives exchange in India that allows traders to buy and sell commodities such as gold, silver, crude oil, natural gas, and agricultural products through futures contracts. A futures contract is a standardized agreement to buy or sell a specific quantity of a commodity at a predetermined price on a future date. Unlike stock trading, where shares are bought and held, commodity futures trading does not involve actual ownership of the commodity; instead, traders speculate on price movements to make profits.
One key feature of Commodities trading is that settlement occurs on a daily basis. This means that profits and losses are adjusted at the end of each trading day based on market price fluctuations, a process known as mark-to-market (MTM) settlement. Traders must maintain a margin in their accounts to cover potential losses. Commodities trading is highly leveraged, allowing traders to take large positions with a relatively small investment, but this also increases the risk. Since commodity prices are influenced by factors such as global demand and supply, geopolitical events, weather conditions, and currency fluctuations, Commodities trading requires careful analysis and risk management strategies.
