Sensex India: Stock Market Today

Sensex down by 174.42 points: Nifty loses 54 points

Mumbai, Dec 18 (UNI) The Sensex of the Bombay Stock Exchange today crashed by 174.42 points to settle in the red at 16,719.83, while the Nifty index of the National Stock Exchange moved below the 5k mark to a two-week low of 4,987.70 with a loss of 54.05 points, weighed down by speculation that the central bank would tighten the monetary policy to help stem rising prices.

The yield on the 10-year benchmark bond rose to 7.7 pc, matching a 13-month high hit on December 11 2009. The 10-year bond yield had ended at 7.64 per cent on December 17, 2009.

Sell-off was seen across all the sectors in late trade, barring pharma and auto. Realty, oil & gas, banking and FMCG were the major losers.

However, Tata Motors, TCS, HCL Tech, Wipro, Sun Pharma, Ranbaxy, Hero Honda and Cipla were the only gainers. The markets were in a consolidation mode till 1400 hrs and traded in a tight range of 5,010-5,060.

The BSE Sensex was down 201.19 points or 1.19 per cent, off close to 205 points from the day's high. Two index heavyweights, Reliance Industries (RIL) and ICICI Bank, slumped and FMCG, banking and realty stocks fell. The market breadth turned weak in contrast to a strong breadth earlier in the day, brokers said.

Intraday volatility was high. The market cut losses soon after an early slide. It came off the higher level later. The market recovered from lower level after hitting a fresh intraday low in morning trade. The market slumped, reversing course after moving into positive zone from negative zone for a short in afternoon trade. The market extended losses in late trade with the Sensex ending at the lowest level of the day.

European equities drifted higher, with stronger energy shares on the back of firmer crude oil prices outpacing a weaker financials. Asian stocks fell on concerns that banks will need to raise more equity and FedEx Corp forecast profit that missed analysts' estimates.

The BSE Sensex resumed down 38.34 points to 16,855.91. It rose 4.94 points at the day's high of 16,899.19 in afternoon trade.

The S&P CNX Nifty of NSE opened flat at 5042.00 and then recorded the day's high and low at 5043.40 points and 4,979.05 respectively.

On BSE, 1125 shares advanced as compared with 1681 that declined. A total of 99 shares remained unchanged. Among the 30-member Sensex pack, 24 fell, while the rest rose.

The key BSE indices plunged with top Realty index down by 2.06 epr cent to settle at 3708.76 pts, Oil & Gas index by 1.74 pc to 9945 pts, FMCG index by 1.23 pc to 2755.94 pts, Bankex index by 1.22 pc to 9542.94 pts and PSU index by 1.02 pc to 9083.13 pts.

However, a few leading indices gained as HC index was up by 1.32 pc to 5117.57 pts, CD index by 0.53 pc to 3530.78 pts and Auto index by 0.27 pc to 7214.52 pts.

RIL crashed by 2.28 per cent to close at Rs 1,010.45, leading the top losers in Group A on BSE at the end of the session. Among the other heavyweight losers were Sterlite Ind, which was down by 2.03 per cent to Rs 818.05, followed by ICICI Bank by 2.02 per cent to Rs 808.80, DLF Ltd by 1.97 per cent to Rs 358.15 and Bharti Airtel by 1.89 per cent to Rs 317.10.

However, the key shares that gained included Tata Motors, up by 3.16 per cent to Rs 732.75, Sun Pharma by 1.12 per cent to Rs 1,497.85 and TCS by 0.67 per cent to Rs 727.50).

In the midcap space, Havells India was up 13.29 per cent and Bayer Cropscience rose 10.59 pc. Bajaj Holdings, Deccan Chronicle and Sterlite Tech were up 5-6.6 pc.

However, HT Media, Jagran Prakashan, KGN Industries, Gammon India and Bajaj Finserv fell 4-5 pc.

In the smallcap space, Elder Pharma, Panoramic Universal, Sadbhav Engg and Advanta gained 7.5-10.5 pc. However, RSWM, Cranes Software, Kwality Dairy, Sanghi Ind and Rain Commodities lost 4.5-5 pc.

High valuations worry investors, India down

Barring a few, most major indices across the world saw declines this week. India too, unfortunately found itself amongst the losers. India's benchmark index, the BSE-Sensex ended the week lower by 2.3%. This, after a subdued performance last week to when the index saw an almost flattish performance. The recent dull performance of the markets here in India come at a time when concerns about high valuations are taking centre stage.

As far as global markets are concerned, the German markets led the gains this week, with its index ending higher by about 1.3%. It was followed by Japan and Singapore, which ended marginally higher by about 0.3% and 0.1% respectively. Japanese markets were propped up by banking stocks in the country, which rose on the optimism that they'll have at least a decade to implement stricter capital rules. The Chinese and Brazilian markets saw the biggest declines this week, falling by a hefty 4.1% and 3.6% each. The fall in China was led by stocks of real estate developers in the country on concerns that the nation will step up measures to curb property speculation.

Source: Yahoo Finance

Coming to the performance of BSE indices, pharma stocks were in favour this week as the BSE-Healthcare index ended higher by about 3.8%. It was followed by the BSE-IT index which recorded gains of about 3% after gaining 2.2% in the previous week too. However, the list of loser far outstripped the sectoral indices that saw gains. Banking stocks were the worst affected by the selling. The BSE Banking index lost 5.6% this week. Expectations are on a rise that the RBI will raise interest rates soon to tame rising inflation. This is what possibly hurt banking stocks during the week. Pressure on bank stocks is simply because higher interest rates from the RBI will mean higher cost of funds for banks. This would subsequently force them to raise their own interest costs thereby leading to a possible decline in credit offtake. The losses of the BSE Banking index were closely followed by the BSE Realty and BSE Oil & Gas stocks which lost 5.5% and 4.1% respectively. Defensive FMCG stocks too took a hit with the BSE FMCG index seeing declines of 3.3% during the week.

Source: BSE

Moving on to the key corporate developments during the week, in an unexpected move, telecom regulator TRAI is planning change the rules in the telecom industry, wherein operators would have to start presenting a business case each time they come out with a tariff package. Only once the regulator is convinced the new tariffs are profitable would they be approved. This is in contrast to the status quo in the past wherein operators did not require prior approval for tariff packages, but were left to market forces. As per a leading business publication, TRAI has already begun work on examining tariff packages and the regulator will soon invite companies to present their business case. It may be noted that the exercise will also cover existing tariff packages. TRAI is doing this with the intention of ensuring the long term health of the telecom sector and its attractiveness to investors. This will come as relief to established players like Bharti Airtel who have been nervous about the predatory pricing that many new entrants in the industry have resorted to.

Steel giant SAIL during the week asked the government to levy anti-dumping duty to curb cheap steel imports at a time when profits are under pressure due to falling prices. Earlier, the steel ministry had requested the finance ministry for a 10% duty on steel imports, which was turned down. The imports come from China and Ukraine at US$ 400 per tonne at a time when rates are US$ 500 to US$ 550 per tonne in India. Given the global overcapacity situation in the sector, we believe the Indian steel makers will have to lobby hard to insulate themselves from low prices. It may be noted that even if the quantity of import is not significant, import prices set the benchmark for the industry.

Cement major ACC said that it does not expect any slowdown in the demand for the commodity on account of prospective rollback of government stimulus. It may be noted that due to the cut on excise duty, cement companies were able to save Rs 4 to 5 per bag which was passed on to the customer. However as the government might roll back these excise cuts in the next Union Budget, the price of cement and related products are expected to move northward. However, ACC does not expect this to impact the retail demand for the cement. It is for this reason it plans to invest Rs 15 bn in capex during 2010 especially in its readymade concrete (RMC) segment which mainly caters to the Indian real estate sector. The company will be expanding the capacity at its Karnataka (Wadi) plant from 5.8 mt to 8.8 mt by April 2010.

The buoyancy in the IT sector during the week seemed a result of strong economic data coming out from the country these IT majors get their maximum revenues from, the US. As per reports, retail sales came in stronger than expected in the US and consumer sentiment also showed a significant improvement on a month on month basis. It should be noted that consumer spending accounts for nearly 2/3rd of the US GDP and hence, positive reports on this front does raise expectations a great deal of a economic recovery in the US and thus, higher sales for Indian IT companies. Furthermore, a strong US economy also means a stronger dollar, another positive factor for Indian IT companies.

Infosys, India's second largest IT services exporter is considering prospects of a joint venture with the IT arm of German engineering major Siemens AG. If the deal with Infosys goes through, it will help the Indian IT major to boost its revenues from the European markets. The company has already hinted that it aimed to increase its revenue contribution from Europe to 40% in the next couple of years. At present it generates over 60% revenue from the US, 25% from the Europe and the remaining comes from rest of the world. The cash rich company has also hinted that it plans to take the inorganic route for gaining strong foothold into the target markets.

Movers and shakers during the week

Company	11-Dec-09	18-Dec-09	Change	52-wk High/Low
Top gainers during the week (BSE-A Group)
Apollo Hospitals	455	565	23.9%	625/350
Bajaj Holdings & Invst.	560	649	16.0%	664/210
Dr. Reddy's	1,113	1,205	8.3%	1,226/357
Asian Paints	1,698	1,800	6.0%	1,811/681
Ultratech Cement	852	900	5.6%	917/325
Top losers during the week (BSE-A Group)
Andhra Bank	119	102	-13.9%	125/37
Rei Agro	50	44	-11.9%	104/38
United Spirits	1,390	1,228	-11.7%	1,415/426
IVRCL Infra	380	337	-11.4%	425/82
IFCI	57	51	-11.2%	61/16

Source: Equitymaster

Bank credit growth stood at 10.5% YoY during the fortnight upto 4th December 2009. This was faster than the credit growth during the previous 3 fortnights. However, the sustainability of this faster pace of credit growth is at question. This is much lower than the RBI's target of around 13% to 14%. It shows that Indian banks are still wary of lending to segments such as personal loans and credit cards. Borrowings from corporate clients too has not picked up a good pace. This is in contrast to the enthusiastic lending by banks to segments such as home loans which have a collateral backing them and are considered more safe. It may be noted that the total outstanding deposits of banks as of the 4th of December grew 18% YoY.

In what might burn a deeper hole in your pocket, India's food price inflation is now nearing 20%. This is as per data compiled by the commerce ministry. It shows that food prices on an average increased by 19.95% during the week ended December 5. This is higher than the 19.05% food price inflation that was recorded in the previous week. The wholesale price index on the other hand more than trebled to 4.8% during November as rising prices of food items like potato, sugar and pinched consumers in a big way. This led the investors to speculate that a rate hike or a liquidity tightening measure could be in the offing, which in turn could also apply brakes to the Indian GDP growth.

But as unpredictable as macroeconomic developments have shown themselves to be, it would probably be wisest for an investor in stocks to devote as little time as possible in anticipating such events. And least of all, make their investment decisions on the basis of these anticipations. Spotting and investing in a company that has show for many years past that it can navigate such macroeconomic vagaries with ease, and is available at fair or attractive valuations is the best bet an investor can have.

Trading characteristics

Most traded currencies^[2]
Currency distribution of reported FX market turnover

Rank	Currency	ISO 4217 code (Symbol)	% daily share (April 2007)
1	United States dollar	USD ($)	86.3%
2	Euro	EUR (€)	37.0%
3	Japanese yen	JPY (¥)	17.0%
4	Pound sterling	GBP (£)	15.0%
5	Swiss franc	CHF (Fr)	6.8%
6	Australian dollar	AUD ($)	6.7%
7	Canadian dollar	CAD ($)	4.2%
8-9	Swedish krona	SEK (kr)	2.8%
8-9	Hong Kong dollar	HKD ($)	2.8%
10	Norwegian krone	NOK (kr)	2.2%
11	New Zealand dollar	NZD ($)	1.9%
12	Mexican peso	MXN ($)	1.3%
13	Singapore dollar	SGD ($)	1.2%
14	South Korean won	KRW (₩)	1.1%
Other			14.5%
Total			200%

There is no unified or centrally cleared market for the majority of FX trades, and there is very little cross-border regulation. Due to the over-the-counter (OTC) nature of currency markets, there are rather a number of interconnected marketplaces, where different currencies instruments are traded. This implies that there is not a single exchange rate but rather a number of different rates (prices), depending on what bank or market maker is trading, and where it is. In practice the rates are often very close, otherwise they could be exploited by arbitrageurs instantaneously. Due to London's dominance in the market, a particular currency's quoted price is usually the London market price. A joint venture of the Chicago Mercantile Exchange and Reuters, called Fxmarketspace opened in 2007 and aspired but failed to the role of a central market clearing mechanism.

The main trading center is London, but New York, Tokyo, Hong Kong and Singapore are all important centers as well. Banks throughout the world participate. Currency trading happens continuously throughout the day; as the Asian trading session ends, the European session begins, followed by the North American session and then back to the Asian session, excluding weekends.

Fluctuations in exchange rates are usually caused by actual monetary flows as well as by expectations of changes in monetary flows caused by changes in gross domestic product (GDP) growth, inflation (purchasing power parity theory), interest rates (interest rate parity, Domestic Fisher effect, International Fisher effect), budget and trade deficits or surpluses, large cross-border M&A deals and other macroeconomic conditions. Major news is released publicly, often on scheduled dates, so many people have access to the same news at the same time. However, the large banks have an important advantage; they can see their customers' order flow.

Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXXYYY or YYY/XXX, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX is expressed (called base currency). For instance, EURUSD or USD/EUR is the price of the euro expressed in US dollars, as in 1 euro = 1.5465 dollar. Out of convention, the first currency in the pair, the "base" currency, was the stronger currency at the creation of the pair. The second currency, counter currency or "term" currency, was the weaker currency at the creation of the pair. Currencies are occasionally incorrectly quoted with the pairs inverted e.g. EUR/USD but this is incorrect. The "/" acts the same as the divide mathematical operator and derives the actual exchange rate. e.g. an amount of $140,000 equates to €100,000. $140,000/€100,000 = $/€ = USD/EUR = a rate of 1.4 hence EURUSD or USD/EUR. See Exchange_rate

The factors affecting XXX will affect both XXXYYY and XXXZZZ. This causes positive currency correlation between XXXYYY and XXXZZZ.

On the spot market, according to the BIS study, the most heavily traded products were:

• EURUSD: 27%
• USDJPY: 13%
• GBPUSD (also called cable): 12%

and the US currency was involved in 86.3% of transactions, followed by the euro (37.0%), the yen (17.0%), and sterling (15.0%) (see table). Volume percentages for all individual currencies should add up to 200%, as each transaction involves two currencies.

Trading in the euro has grown considerably since the currency's creation in January 1999, and how long the foreign exchange market will remain dollar-centered is open to debate. Until recently, trading the euro versus a non-European currency ZZZ would have usually involved two trades: EURUSD and USDZZZ. The exception to this is EURJPY, which is an established traded currency pair in the interbank spot market. As the dollar's value has eroded during 2008, interest in using the euro as reference currency for prices in commodities (such as oil), as well as a larger component of foreign reserves by banks, has increased dramatically. Transactions in the currencies of commodity-producing countries, such as AUD, NZD, CAD, have also increased.

Market size and liquidity

Main foreign exchange market turnover, 1988 - 2007, measured in billions of USD.

The foreign exchange market is the largest and most liquid financial market in the world. Traders include large banks, central banks, currency speculators, corporations, governments, and other financial institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements. ^[2] Since then, the market has continued to grow. According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008.^[3]

Of the $3.98 trillion daily global turnover, trading in London accounted for around $1.36 trillion, or 34.1% of the total, making London by far the global center for foreign exchange. In second and third places respectively, trading in New York accounted for 16.6%, and Tokyo accounted for 6.0%.^[4] In addition to "traditional" turnover, $2.1 trillion was traded in derivatives.

Exchange-traded FX futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts.

Several other developed countries also permit the trading of FX derivative products (like currency futures and options on currency futures) on their exchanges. All these developed countries already have fully convertible capital accounts. Most emerging countries do not permit FX derivative products on their exchanges in view of prevalent controls on the capital accounts. However, a few select emerging countries (e.g., Korea, South Africa, India—[1]; [2]) have already successfully experimented with the currency futures exchanges, despite having some controls on the capital account.

FX futures volume has grown rapidly in recent years, and accounts for about 7% of the total foreign exchange market volume, according to The Wall Street Journal Europe (5/5/06, p. 20).

Top 10 currency traders ^[5]
% of overall volume, May 2009

Rank	Name	Market Share
1	Deutsche Bank	20.96%
2	UBS AG	14.58%
3	Barclays Capital	10.45%
4	Royal Bank of Scotland	8.19%
5	Citi	7.32%
6	JPMorgan	5.43%
7	HSBC	4.09%
8	Goldman Sachs	3.35%
9	Credit Suisse	3.05%
10	BNP Paribas	2.26%

Foreign exchange trading increased by 38% between April 2005 and April 2006 and has more than doubled since 2001. This is largely due to the growing importance of foreign exchange as an asset class and an increase in fund management assets, particularly of hedge funds and pension funds. The diverse selection of execution venues have made it easier for retail traders to trade in the foreign exchange market. In 2006, retail traders constituted over 2% of the whole FX market volumes with an average daily trade volume of over US$50-60 billion (see retail trading platforms).^[6] Because foreign exchange is an OTC market where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house. The biggest geographic trading centre is the UK, primarily London, which according to IFSL estimates has increased its share of global turnover in traditional transactions from 31.3% in April 2004 to 34.1% in April 2007. The ten most active traders account for almost 80% of trading volume, according to the 2008 Euromoney FX survey.^[3] These large international banks continually provide the market with both bid (buy) and ask (sell) prices. The bid/ask spread is the difference between the price at which a bank or market maker will sell ("ask", or "offer") and the price at which a market taker will buy ("bid") from a wholesale or retail customer. The customer will buy from the market-maker at the higher "ask" price, and will sell at the lower "bid" price, thus giving up the "spread" as the cost of completing the trade. This spread is minimal for actively traded pairs of currencies, usually 0–3 pips. For example, the bid/ask quote of EUR/USD might be 1.2200/1.2203 on a retail broker. Minimum trading size for most deals is usually 100,000 units of base currency, which is a standard "lot".

These spreads might not apply to retail customers at banks, which will routinely mark up the difference to say 1.2100/1.2300 for transfers, or say 1.2000/1.2400 for banknotes or travelers' checks. Spot prices at market makers vary, but on EUR/USD are usually no more than 3 pips wide (i.e., 0.0003). Competition is greatly increased with larger transactions, and pip spreads shrink on the major pairs to as little as 1 to 2 pips.

Foreign exchange market

The foreign exchange market (currency, forex, or FX) trades currencies. It lets banks and other institutions easily buy and sell currencies. ^[1]

The purpose of the foreign exchange market is to help international trade and investment. A foreign exchange market helps businesses convert one currency to another. For example, it permits a U.S. business to import European goods and pay Euros, even though the business's income is in U.S. dollars.

In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

The foreign exchange market is unique because of

• its trading volumes,
• the extreme liquidity of the market,
• its geographical dispersion,
• its long trading hours: 24 hours a day except on weekends (from 20:15 UTC on Sunday until 22:00 UTC Friday),
• the variety of factors that affect exchange rates.
• the low margins of profit compared with other markets of fixed income (but profits can be high due to very large trading volumes)
• the use of leverage

As such, it has been referred to as the market closest to the ideal perfect competition, notwithstanding market manipulation by central banks.^{[citation needed]} According to the Bank for International Settlements,^[2] average daily turnover in global foreign exchange markets is estimated at $3.98 trillion. Trading in the world's main financial markets accounted for $3.21 trillion of this. This approximately $3.21 trillion in main foreign exchange market turnover was broken down as follows:

• $1.005 trillion in spot transactions
• $362 billion in outright forwards
• $1.714 trillion in foreign exchange swaps
• $129 billion estimated gaps in reporting

Why is the market down today?

The market is down again today and there are millions of people trying to figure out why. Some will tell you they know why and give you a plausible rationale. There may be bits of truth here and there but there is also an arbitrary nature too. If not arbitrary, then haphazard.

The market may be down because nobody in Washington - Obama, Benanke or Geitner - made a speech today pounding the drum for a brighter economic outlook.

It could be because oil prices have been slowly rising again as inventories are drawn down.

Perhaps it is just profit taking after a nine week 32% "bear market rally", which many have been saying we are experiencing.

This downturn could also be the result of a self fulfilling prophecy, since many investors were hoping it would drop at least a little so they would have an opportunity to get into the market after missing out over the past two months.

What if the stock market is down because the weather is improving and folks have other things to do, like shopping?

Maybe the powers above in the heavens flipped a giant coin and it was just our luck today would be a down day.

The more cynical among us might think that the market is just being manipulated by investment banks and hedge fund managers toward their own gains -- or even more cynical they just want to jerk us around for fun.

Before the day is done you will also hear about bank loans, stock sales and dilution, government spending, housing inventory, retail sales, more foreclosures, unemployment, health care worries, the Social Security dilemma and more. You probably can add a few more of your own.

Here is the most plausible reason the market is down today -- check off, all of the above!

Actually as I have been typing the market closed and the DJIA was down 184.22 to 8284.89; the NASDAQ was down 51.73 to 1664.19 and the S&P was down 24.44 to 883.91, about 2.5% on average for the group.

When market ups?

According to IMS Research's latest analysis, the world market for uninterruptible power supplies (UPS) grew by more than 7% last year. However, its performance varied significantly over the course of the year.

While in the first three quarters the UPS market grew quickly, as in 2007, growth was abruptly checked in the fourth. Revenues fell almost everywhere, for products of all kVA ratings. A comparison of the fourth quarters of 2007 and 2008 shows double-digit global decline, with EMEA reporting a particularly sharp retreat.

The UPS market initially continued to grow as the world economy stumbled, but existing orders and critical upgrades could only protect revenues for so long. "With the worsening economic crisis and the unsustainable growth of early 2008, we were inevitably going to see an adjustment in the market," says analyst Donald Henschel.

Despite a hard quarter with dark predictions for the near term, there is no reason to expect UPS revenues to stay down for long. Henschel continues, "The underlying growth factors for UPS are still going to be there when credit thaws and IT budgets pick up. As long as power quality remains an issue, ever-increasing worldwide dependence on IT resources will expand the market for UPS."

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Tips For Online Stock Trading

Trading stocks online can be a lucrative arena to enter, however, this may also come with great risks. If you are not well equipped with the artillery to get you through the online stocks jungle, then you might end up losing so much than what you have bargained for. Here are a few tips that could help prepare you for online stock trading.

Choose A Smart Trading Style That Works For You

Take time to consider what type of trading you would want to do and what style would best fit your lifestyle. For example, if you are interested in day trading, keep in mind that in order to do well in this particular field, you may need to be in front of the computer and on the telephone for very long hours in a day.

Whatever trading style you may choose, may it be day trading, short-term trading, weekly trading or even monthly trading, consider the nature of these styles and how you can fit them into your way of working.

Find A Good And Legitimate Broker

Another very important thing to remember in online stock trading is to find a good broker. Make sure that you take time to get to know your broker by checking whether the firm is legitimate under the SEC and if it receives good reviews from those with experience in trading.

The type of trading style that you decide to delve into should also greatly determine on which broker would be best for you. If you were engaging in day trading, then it would be best to choose a firm that has very good and accessible technological services. Other styles of trading can manage less sophisticated brokers.

Choose A Very Good Strategy

Because of the fact that stock trading involves so many risks, choosing a very good strategy can be very helpful for you to weather obstacles that will come your way.

Make sure that you choose a trading method that will take advantage of both up and down markets. A strategy that will work in all types of markets will surely be beneficial because you never know when demands for stocks may increase or go down, and surely, you wouldn't want to end up losing money because you failed to foresee the different trends of the market.

Aside from this, make sure that your strategy involves minimal risks and gives you high rewards. It is always better to prevent and control risks than allow the chances that you may have to face serious dilemmas. Risk management is very vital in order to become successful in online trading.

Know About Stocks

Take time to know which stocks would be wise to place your investments on through extensive research or even through seeking the help of a professional. It is important that you are aware of the type of stocks that you risk your money on, after all, whatever results these may garner in the market will surely affect whether or not you will gain or lose profit.

Also take time to know when it would be best to sell your stocks. Most people just focus on what and when they should buy stock, but often times they forget how important it is to consider when would be the right time to sell. Take in mind the signs and conditions that can give you signals on when it would be best to get out of a bad investment before you lose substantial amounts of money.

These are all very basic, yet very vital things that anyone who wants to engage in the online stock trading business must know. After all, investing on your own knowledge and skills in trading is the most important thing that anyone must consider in order to win in this very risky trading game.

Follow these tips and surely, you can get a significant difference in your performance as an online stock trader.

Stock Trading - When Should You Sell Stocks?

Among many stock traders, one mistake commonly made is that investors may often exhaust themselves on merely thinking about buying stocks without foreseeing that there may come a time that they may need to let go of such stocks for lucrative reasons. Sometimes, you may realize that selling can really be more practical than holding on to something that may cost you more in the long run. Let us learn why and when you should sell stocks.

When Your Stock Investment Is No Longer Doing Well

One very major reason that you may need to consider selling your investment is when it has gone sour by underperforming in the market. There may come a time when investing on certain stocks may even cost you more than the actual gains that you get in return.

There are times however, when you do not necessarily have to sell within the instant. Make sure that you check possible reasons why your stock has not been doing well, certain factors like the wrong market timing or the occurrence of certain changes within the company may normally cause some decline in stock behavior.

But when you have noticed that your stock has not been meeting your expectations for a consecutive number of trading quarters, and then it may certainly be wiser to just save yourself from a bad investment.

When A Better Opportunity Presents Itself

Another good reason to sell your stock is when there is a better opportunity available in the market. This is a frequent reason for many people to sell stocks and may create a churning in an investor's portfolio, which may mean that the investor's account extremely active through frequently purchasing and selling in order to generate profits.

As what has been previously mentioned, once you believe that an investment has truly gone sour and it would be quite difficult to rise above the decline, then the best option for you would certainly be selling and looking for better opportunities available.

When Your Reason For Investing Is No Longer There

Lastly, another of the most common reasons why you should sell your stock is when you have lost your belief in your investment. If you have lost or have already met your reasons for investing, then, it may be normal for you to feel that you should sell your stock.

There may be many reasons for you to invest on stocks and some of these may perhaps be the possibility that you want to gain commissions from a certain company or perhaps you truly believe in a certain company's product.

However, when the time comes wherein you no longer believe in investing in your stocks or you have lost your reasons to do so, then selling your shares may be the right thing to do.

It is only smart if you are an investor to not only think about purchasing or buying stock shares and to stop at that. There really must be a certain degree of preparation on your part to be willing to sell your investment at some time. After all, if your investment no longer proves to be practical for you to keep, then selling it may be the best move for you.

Remember that for you to be successful in stock trading, you must be prepared with the many highs and lows of the game. Keep in mind these reasons stated above on when you should consider selling your stocks and perhaps, the selling option could be a great route for you to rise above declines.

The Basics On Stock Trading

The most common picture that comes to mind when people hear about stock trading is the one we see in movies where men in suits basically shout and wrestle each other in some huge New York building to bicker about money. Although to some extent, there is some truth to this image, trading in the stock market is actually a more complex concept that helps many people earn money and keep businesses alive.

The concept of trading fundamentally consists of the buying and selling of stocks among individuals or companies through brokers. Through buying a share of stock or a share of ownership in a particular company, an individual can then benefit and earn money from however the company they invested on may fair in the market.

There are two basic methods in which the stock market operates -on the exchange floor where buying and selling is done more traditionally and electronically where technology takes on the exchange game.

Trading On The Exchange Floor

The trading that occurs on the more traditional exchange floor of the New York Stock Exchange (NYSE) is basically what most of us have become accustomed to from seeing it in the movies and on television. Basically, the NYSE consists of many brokers who negotiate the deals for individuals to be able to trade stocks.

As chaotic as the stock exchange floor may seem, there is actually a common pattern that occurs among most simple trades. First, an order to buy a certain number of stocks would be negotiated through a broker. After this, the broker's order department would forward this arrangement to their floor clerk on the exchange. The floor clerk would then inform the company's floor traders in order to find other traders that are willing to sell the equal number of stocks from the company that is offered to be bought. After the two parties agree on a price and close the deal, the message would be forwarded back up the line, and the broker would then inform the interested buyer on the final price.

Negotiations may take a few minutes or even longer, depending on the performance of the stocks as well as the market. For more complex trades and larger orders of stocks however, there may be a more complicated process but the principles basically remain the same.

Trading Electronically

A growing trend these days however, is trading stocks electronically, which is done through advanced computerized systems. Unlike the NYSE that generally operates through the manpower of brokers, its counterpart, the National Association of Securities Dealers Automated Quotations (NASDAQ), trades stocks completely through electronic means.

These electronic markets forgo with human stockbrokers and instead make use of advanced computer networks to match buyers and sellers. And through this method, transactions are usually faster and more efficient.

Through electronic trading, investors get many benefits such as being able to get faster confirmations, as well as facilitating control by having online investing readily available through the Internet. However, brokers basically still handle the trades, as investors do not have direct access to the electronic markets.

The process that takes place in both methods however, is usually hidden from investors. Typically, if you are an investor, a call from your broker and regular reports on your stock investments would be provided for you, but you will not really get to see what is happening behind the scenes.

Through the investments that individuals make, many businesses are kept afloat and running. And in exchange for this, investors get a fair share of earnings. Stock trading may be a complex process, but at the end of the day, many people basically benefit from all of it. As a result, the whole concept becomes simple.

Introduction To Forex Trading

If you are just starting out in the stock trading business or if you are already in it, you may have heard the term Forex trading quite a few times, but you probably might not have a clue on what it may actually mean.

Forex or foreign exchange trading is actually the largest and a fast-rising financial industry in stock trading these days. Here is a quick introduction to trading in foreign exchange.

What Is Forex Trading?

The Foreign Exchange market (Forex) is actually the largest financial market in the world. It actually makes a volume of over 2 trillion U.S. dollars a day, and as compared to its counterpart -the New York Stock Exchange (NYSE) which usually only trades a volume of 25 billion dollars each day, this industry is so huge that it becomes a profitable playground for many investors including central banks, large banks, multinational companies and even governments.

What is actually traded on the foreign exchange is money. It actually consists of the concurrent buying and selling of currencies, which are traded through brokers and are traded in pairs.

When you are buying currency, it is like you are investing on the economy of a particular country. For example, if you buy U.S. dollars then it is as if you are buying a share of the U.S. economy. Whatever the market thinks about the current health of a country's economy would directly be reflected on the price of its legal tender and this is how currencies go up or down.

Forex Trading For The Masses

Originally the whole concept of trading in the Foreign Exchange was only intended for huge companies and banks, but not for normal citizens. After all, you could only take part in the trade if you have around ten to fifty million dollars minimum.

However, with the rise of globalization through the Internet, trading is now offered to retail traders. And these days, almost anyone can now invest on the foreign trade. All you really need to join is some small amount of money, a computer and a high-speed Internet connection, and you can sign up for an account with online Forex trading firms.

There is no exact physical office for Foreign Exchange unlike its counterpart in New York. However, the three main centers for this trade are United States, United Kingdom and Japan. These countries handle majority of Forex transactions and trades goes on for 24 hours everyday.

Today, the Foreign Exchange, as the largest market in the world, is fast paced and enormous. And it has become a very lucrative arena for many traders who may have had participated in stock trading and in other markets. Many large institutions and even smaller-based individuals have gone out to play in this market.

Although this particular market gives huge promises, remember that there is still too much at stake. It is estimated that around 70 to 90 percent of the Foreign Exchange market is still speculative. And the parties that trade currencies may not always have a plan to actually take delivery of the said currency, and more are still speculating on movement of money.

If you are interested in investing in this particular arena, take time to be familiar with the game and make sure you get the right educational background. Taking the extra mile will all be worth it, and once you have tasted your success in this arena, you will be ready to take on anything in trading.

Familiarizing Commonly Used Stock Market Terminologies

The stock market is a great arena for people to make a lot of money, however, for many beginners, all the hustle and bustle of stock trading may cause a lot of confusion, especially if you are not familiar with the many terms and tactics used for negotiations.

If you are a beginner in the stocks game, make sure that you familiarize and educate yourself well on stock trading knowledge. You can of course, start off by widening your vocabulary. Here are a few terms that you may need to familiarize:

Stocks

Stocks are probably the most important and common items traded in the stock market. These are actually shares of certain companies, which are publicly sold and traded.

Whenever people buy a portion of stock in a particular company, this means that they acquire a share of ownership and investing in that specific business. Through this, a stockholder is given certain rights towards the company such as a vote in stockholder meetings as well as his or her financial share from the company's earnings.

Broker

A stockbroker is the person who handles the actual trading of stocks. He or she does the negotiations to buy and sell the stocks in behalf of the investors and the companies involved. The many various types of brokers may include full-service, online, auto-trade and discount brokers.

Bull Market

A bull market is a market that manifests a continuous increase in the value of its stocks as well as a steady growth. Generally, with this type of market, investors gain an optimistic attitude and may want to buy more rather than sell stocks.

Bear Market

Bear markets mainly characterize significant losses and declines in a particular market. With this type of behavior among stocks, most investors would generally want to sell more of their stocks and may be pessimistic about investing.

Dividends

Dividends are added or bonus payments given to stockholders after a profitable quarter. With this sum of money, many people may often reinvest on more shares of stock, which allows individuals to earn so much.

Futures

Futures, just like stocks, are also traded in the market. However, these are purchased against future costs of commodities. You can earn from these, if in time, the actual price of commodities become higher than what you paid for the futures. On the other hand, you can also lose money if the price becomes lower that what you paid for.

Day Trader

A day trader is the person who buys and sells stocks aggressively in one day. Usually, he or she does this for several times each day in order to make quite a few small profits within the day.

Trading on Margin

Trading on margin may be similar to trading stocks with the use of borrowed money. Through this, you can purchase shares of stock for only a portion of the actual price. The remainder of the cost can be paid upon the actual sale of the particular stock, or on a later date.

These terms are only a few of the most commonly used language in stock trading. And upon encountering them, you may certainly have the impression of how intimidating the stock market can get. With the many complicated terminologies and tactics, you may easily get backtracked if you do not know enough about what you are dealing with.

Remember that if you are new at doing business in this arena, make sure that you take the extra mile to learn more about more terms as well as strategies on how you can best maximize profit. A little hard work will certainly get you far, and one of these days you will realize how all of this can pay off.

What is Forex?

If you have a little extra money on hand, you might want to consider investing in the Forex market. What is the Forex market? Forex, (which specifically stands for the Foreign Exchange Market), is an international exchange allowing people to invest money based on currency exchanges. If a currency increases in value, a person makes a profit, similar to how one can make a profit when stocks increase in value.

Since the Forex market is worldwide, it is offers more profit potential than even the New York Stock Exchange. In fact, the Forex market brings in over 1.5 trillion in U.S. dollars every day. Any serious investor needs to definitely consider getting into the Forex market at some point in their investment ventures.

The process of Forex trading is very similar to stock investing. A person can opt to get a Forex broker who will provide assistance in the trading process. If they have a broker, they will need to have a little money upfront to pay them. This is in addition to whatever money was going to be used in the process of Forex investing. If this is a problem, a person can try to start Forex trading themselves.

Numerous websites are available to assist in this process. Examples include FXCM.com and FXClub.com. With FXCM.com you'll need a minimum of $300, before being able to start with your Forex venture. On the other hand, FXClub.com can allow you to start Forex trading with as little as $10.

If you would prefer to trade as the professionals do with thousands instead of hundreds upfront, you may want to consider doing what is known as margin trading. Margin trading is when a person does Forex trading with capital that was obtained through a loan or some other type of borrowed source. The hope is that enough money will be earned through Forex trading that a person will still retain a profit even after their loan is paid off.

To be successful with Forex trading, one must do more than simply invest money. They need to be aware of all the economic trends associated with whatever currency they are looking into. This means evaluating both the currency itself and the economic climate of the country it is associated with. While the most successful Forex trades tend to be with the Euro or the U.S. dollar, this does not mean other currencies can't offer a good profit, especially if the country associated with them are progressing.

The best way to form an educated guess is by researching that particular country's news. It may not even hurt to network with citizens of that country through message boards. If language is an issue, a person can consider using an automated translator or paying a fee to a professional translator. The latter is preferable if a person has no knowledge of a particular language, since automated translators tend not to translate in the best way.

In conclusion, Forex trading can be an effective way at generating an income. Yet, to do Forex trading properly, one should not neglect the importance of research and statistical analysis of economic trends.

Forex trading example

Trader x has an account of USD 50'000.

He buys EUR/USD 500'000 @ 1.1500 at the market and places a stop loss order at 1.1460.

At this point his maximum risk is USD 2'000 and his margin utilisation is 10%, well above the minimum.

During the day the forex market fluctuates and initially moves down to 1.1480.

At this point trader x has an unrealised loss of USD 1'000 and his margin utilisation has fallen to 9.60% reflecting the effect of the downward move on his margin capacity.

Later still the price moves back up to 1.1550 and trader x decides to take profit. He sells at 1.1550 making a USD 2'500 profit which represents a 5% return on his account value. Note that trader x took only a risk of USD 2'000 and made a return of USD 2'500 this equates to a risk/reward ratio of 1.25. A high risk reward ratio is what every trader should be aiming for.

The viewer should note that the example above is a random case scenario and in no way is meant to allude that the potential for profit is greater than the potential for loss in foreign exchange trading.

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