Bank Nifty options tips provider – Page 84 – Eqwires Best Intraday tips provider in India, top trading tips company, Best Stock Advisory service in India

In Stock market there are 2 ways to gain from financial market Investing and Trading. Investing V/S Trading Difference:

Both investors and traders earn profit by participating in market. Investors gain larger returns over an extended period through buying and holding. Traders take advantage of both rising and falling markets to enter and exit positions over short time by taking entry exit frequently take smaller profits frequently.

What is Investing?

By investing one can gradually build wealth over an extended period of time through buying and holding shares for long term. They build portfolio of different stocks in baskets. Also mutual funds, bonds and other investment instruments are for considered as long term investments.

Investors not only gain returns after long-term but they also get benefits of yearly dividend, bonus etc. Investors are more concerned with market fundamentals, such as price-to-earnings ratios and management forecasts.

What is Trading?

Trading involves frequent transactions, such as buying and selling of stocks. Traders always enters in market for only profit they never desire for dividend or bonus their purpose is to make short term profit again and again instead of holding for long time. Investors expect 10-15% annual returns while traders expect 10% monthly returns.

There are different types of Traders: –

Positional Trader: Positional trader means positions are held for years.
Swing Trader: Swing trader means positions are held for weeks.
Day Trader: In day trading positions are held throughout the day without carry forward.
Scalp Trader: Positions are for hours without holding. Square off within a day.

KEY TAKEAWAYS

Investors invest for long term to get returns after retirement.
Investor’s purpose for investing in long-term is gaining from dividends and bonus for years and after long term to get good-returns on the amount invested.
Traders trades for short term for getting small profits frequently instead of waiting for years to get returns. That can be weekly, monthly or quarterly.
Traders goal is get returns in short-term.

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Market capitalization, commonly called market cap, is the market value of a publicly traded company’s outstanding shares. Market capitalization is equal to the share price multiplied by the number of shares outstanding. Since outstanding stock is bought and sold in public markets, capitalization could be used as an indicator of public opinion of a company’s net worth and is a determining factor in some forms of stock valuation.

Market capitalization is used by the investment community in ranking the size of companies, as opposed to sales or total asset figures. It is also used in ranking the relative size of stock exchanges, being a measure of the sum of the market capitalization of all companies listed on each stock exchange. In performing such rankings, the market capitalization are calculated at some significant date, such as June 30 or December 31.

What is Net worth?

Net worth is the value of all the non-financial and financial assets owned by an institutional unit or sector minus the value of all its outstanding liabilities. Since financial assets minus outstanding liabilities equal net financial assets, net worth can also be conveniently expressed as non-financial assets plus net financial assets. Net worth can apply to companies, individuals, governments or economic sectors such as the sector of financial corporations or to entire countries.

Market Cap Terms: Traditionally, companies were divided into large-cap, mid-cap, and small-cap

Large Cap Stocks:

These are often stocks of Blue-chip companies which are established enterprises with large reserves of cash at their disposal. It is interesting to note that the larger size of the large cap companies does not mean that they grow more rapidly. In fact, it is the small stock companies that tend to outperform them over the longer time frame. But large cap stocks do come with the benefit of allowing the investors to reap higher dividends in comparison to the smaller and mid cap company’s stocks, ensuring that the capital is preserved over the long term period.

Mid Cap Stocks:

These are the stocks of medium sized companies that have a market capitalization of INR 250 Crore to about INR 4000 crore. These companies have a well recognize name in the market which brings along the benefit of potential for growth, as well as the stability that is usually accompanied with being a seasoned player in the market. Mid cap companies have a good track record of steady growth and are very similar to blue chip stocks barring their size. In the long term these stocks do and grow well.

Small Cap Stocks:

As is suggestive of the name, small cap stocks have the smallest value in the market as compared to its counterparts. These are small sized companies that have a market capitalization of up to INR 250 and have the potential to grow at a good pace in the future. Investors who are willing to commit to a long term and are not very particular about the current dividends, and are willing to stand their ground during price volatility, can make significant gains in the future. As an investor you can buy these stocks when they are available at a cheap price during the initial stage of the company. There is no surety about the how the company will perform in the market since they are relatively new. Because these small cap companies are new they are highly volatile and their growth impacts the value and revenue of the company to a huge extent.