Examples and some pro tip for new traders.
The best 3 examples to understand trading are as follows,
Auction on Ganesh Chaturthi laddoos: On the day of Ganesh Chaturthi people use to auction on laddoo, the person who bids for the highest price, laddoo will be sold to him.
Auction on IPL cricket players or Kabbaddi players: Big businessman's auction for demanded players, Who will bid for the highest price the player will be considered in his team.
The auction of paintings or Some artworks: Suppose there is a famous painter and he did the best painting and that is a masterpiece and there is only one piece of painting and many want then that will be auctioned. And sold to the person who will bid for the highest price.
Before the stock exchanges were founded people use to trade in a small building or below any tree. When the stock exchanges came into the picture people used to trade in the stock market rings. And there are some jobbers appointed by brokers who used to trade on behalf of their clients.
The most important thing for trading is Liquidity:
liquidity means if you want to sell something there should be a buyer who will buy. Suppose you want to sell a plot, there should be a buyer who buys the plot. But let's suppose your plot is near the cemetery(Samshan ghat) then there is no to buy the plot then the owner will sell on a low price, but if the plot is on the roadside then many people want to purchase it because the plot has demand. So, if someone wants to sell something there should be a buyer this is called liquidity. For that if you buy the stock on your broker app if you place a buy order then it should execute very fast otherwise we can't say that the stock is liquid enough to trade.
Money is like water in the market
Money is like water in the market which flows from buyers to sellers to banks to markets to other countries like that.
If a company is doing good and the investor sees its future is good then people like to invest in that stock, when the company demand reduces then they will sell it.
Factors that affect the share price to move:
Current News flow about the company
Company's quarterly results (The company will announce result once in 4 months is called a quarter) and the annual result which is announced in the last quarter of the financial year. (the market doesn't follow the Gregorian calendar market has a different calender called the financial calendar).
Total sector performance. There are many sectors like the banking sector, The pharma sector, the auto sector, the FMCG sector, the energy sector, the commodities sector etc. if the sector performing well then there is a high probability that the stock do well until there is bad news of that particular stock.
A total country's economic performance is like how the inflation rates, REPO rates, CPI inflation rates, taxes, and VAT on petroleum products.
International economic factors like American federal decisions. The American market is the mother of all markets.
Geopolitics factors like Russia and Ukraine war, And crude oil prices demand in commodities, US dollar index.
There are two types of factors one is local factors like company results, Union Budget, Intrest rate, and Monetary policy. And there are global factors like geopolitics fed interest rates and international market performance.
And Technical chart of the stock.
