Trading is simply the exchange of services and goods between different entities. Trading is the core of any economic activity in any society. The creation of wealth is instrumental to progress, and a place where trade is executed is known as a market. The market is defined on the basis of products involved. For example, the place in which stocks are traded is known as the stock market. Nowadays, online stock trading is the norm.
Typically, there exist two market forms - organized and unorganized. Organized markets work with regulations in which each entity’s operation is determined by strict adherence to rules, overseen by a regulatory supervisory authority. Unorganised markets do not work with rules. When you buy shares online and engage in trading, the process of trading becomes easy and transparent and most markets are assimilated on the internet. To engage in online trading, you need a platform like Motilal Oswal, and must open a demat account.
- The History of Stock Trading
How did we reach the online trading share market? Certainly not overnight. It's important that you learn the relevance of the history of trading so you know how this process came about. Trade has been a part and parcel of human civilization for a long time. Ages ago, the only form of trading was a barter system in which goods and services were traded (or bartered) for various other goods and services. An exchange that was found to be unsystematic due to the lack of any standard governing the value of products or services, this system was abolished. Unwittingly, this paved the way for currency, representing a standard measure of the value of services and products. In turn, this resulted in a series of financial/economic developments like the facility of credit, trading in shares, etc.
- How did Stock Trading Come into Existence?
Stock trading was born out of European imperialism. Joint stock companies were formed, playing a key role in European imperialist expansion. Stock markets mushroomed across Europe. Consequently, the Dutch East India Company was the primary joint-stock corporation, trading its shares publicly on the Amsterdam Stock Exchange. After this, exchanges sprouted globally. The Bombay Stock Exchange (BSE) was established in 1875. Now, the BSE and NSE (National Stock Exchange) are the main Indian trading houses, with online stock trading options.
- The Types of Stock Trading
Mainly, there are 4 trading types:
Day trading - This is a style that results in purchasing and selling stocks on the same day.
Scalping - What this style aims at is making small profits in a repeated fashion.
Momentum trading - Here, traders make the most of the momentum of a stock, the movement up or down.
Swing trading - Swing trading involves earning profits from stocks over a few days of buying them.
Trading can be a profitable proposition, but it requires practice and analysis in adopting different types of trading. On Motilal Oswal’s platform, you can learn about trading styles and then be a proficient trader.
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