Have You Opened Your Demat Account Yet?

The importance of savings and investment can barely be overstressed in today’s competitive day and age and there is no better place to invest than stock market for handsome returns. You may think that your savings bank account and fixed deposits would be good enough to bring you positive returns in the form of annual or periodic interest without any risk involved. However, what this line of thinking actually does is, expose chinks in your financial armour by neglecting the issue of purchasing power of money over time.

With a rise in inflation, you cannot expect to put aside Rs 10,000 today in a fixed deposit and expect to get a return after 2 years which is even equal to the current purchasing power of the said amount. If you factor in inflation, even the rate of interest on a fixed deposit would not help much in retaining the purchasing power of your money. If you invest somewhere and at the time of maturity have to go in for tax deduction, it also affects the actual returns and the only real option left for your capital to grow is in stock market which can afford much higher gains depending on your approach to investment.

To invest in stocks, first you would need to open a demat account which would allow for you to keep your financial securities including stocks, bonds or debentures in an electronic form. You can open this demat account with your bank or go to a stock broker which is registered as a depository participant (DP) with one of the national depositories. A demat account would not only help you invest and trade easily in the stock market but also remove the worries associated with safekeeping of financial instruments in their physical form.

A number of stock brokers and financial advisors like www.ashlaronline.com also offer expert advice for making the right investments depending on your risk tolerance and benefit from it. Ashlar Online is a reputed stock broking firm with which you can open a demat account for free and take advantage of expert investment advice.

Benefits of Online Trading Through Demat and Trading Account

These days, it has become incredibly easy for anyone to invest in stock markets, thanks to emergence of online trading. Most of the trading takes place through electronic trading network nowadays because of the kind of efficiency, transparency in functioning and ease of use and access it affords. Earlier, if you were a trader or investor, you would have to constantly deal with loads of paperwork and bear with a time consuming transaction processing system. On top of it all, if you bought some shares of a company, you would have to ensure safekeeping of the documents which is no longer required in online trading.

This is made possible through the process of dematerialization of securities, which lets you keep them safe with a depository without the need for handling physical documents. This paperless method of buying, holding and selling securities is easy enough and you simply need to open a demat account with a depository participant which can be a broker, bank or other financial institution registered with a standard depository, which is duly recognized by Securities and Exchange Board of India (SEBI).

If you have a bank account, you can open a 3-in-1 account which includes your demat account, trading account and savings bank account. It is also possible to open a demat account with a broker along with a trading account for purposes of online trading. It is important to note that if you do not wish to trade but simply to keep any kind of securities including stocks, bonds, fixed deposits and mutual funds in electronic form, you can open only a demat account.

However, it would not be possible to engage in online trading through only a demat account and you would need a trading account as well for the purpose. In any case, demat account can be a useful tool for anyone who does not wish to handle physical securities and bother with their safekeeping. It can also serve as a centralized place for managing your securities in an efficient manner and making any changes in address or other important details without taking a great deal of time. With the addition of a trading account, it also becomes possible to buy and sell securities with great ease and realize the advantages of online trading.

Learn the Art of Value Investing

You might be wondering what is value investing and how is it different from usual investment techniques. Well, it isn’t, except for the approach underlying this concept. Value investors essentially seek to invest in shares which have good potential to perform but are currently undervalued by the stock market in India. This puts them in an advantageous position in the long term and if and when the stock performs well and market realizes its actual value.

However, the big question is, how do you actually find out which stocks are likely to perform well in the Indian stock market in the longer run? This is where value investors adopt a slightly different approach from day traders, short term online traders or investors and even some fundamental stock investors. The first thing they do is look for the price-to-earnings ratio (P/E ratio) which is a valuation ratio derived by diving the price per share by earnings per share.



A higher P/E ratio can denote that the company is performing well and investors are expecting it to perform even better in future. On the other hand, a lower P/E ratio can show that online stock traders have limited growth expectations from the stock. However, a lower P/E ratio can also indicate that the stock is currently undervalued if the fundamentals of the company are good enough and indicate good prospects for growth. Price-to-book value ratio (P/B Ratio) is another valuation ratio often used by stock traders in Delhi to assess the value of a stock.

This is derived by dividing the price-per-share which is market price of a single share by the book-value or shareholders’ equity per share. Value investors would prefer to go for a www.ashlaronline.com company with lower P/B ratio, because in that case it would denote that the stocks are undervalued, given the fundamentals are positive, and present a good prospect for long-term investment. High dividend yields can also attract value investors to a stock but they need to find out “intrinsic value” of a company which is subjective and hence one should be careful with it.

Risk Management and Trading in Commodities

Commodities market present an alternative venue for traders which offers an opportunity to deal in commodities of different types including metals, energy resources, agricultural products and livestock. There are a number of commodity exchanges through which trading in commodities market is carried out. These commodity exchanges include National Commodity & Derivatives exchange Ltd. (NCDEX) and Multi-Commodity Exchange (MCX) and these exchanges are in turn regulated by the Forward markets Commission.

When trading in commodities, one should have a good understanding of the price behavior of a certain agricultural or non-agricultural commodity to be able to buy at a reasonable price and sell for higher to make good profits. Agricultural commodities have to be studied from the point of view of seasonal patterns, amount of rainfall or its scarcity and other relevant factors which can directly impact the prices of such commodities.

Those who do not wish to trade in commodities in their physical form, commodity derivatives present an attractive option for traders. Traders with physical possession of goods can also hedge through commodity futures to minimize the amount of risk faced due to changes in price levels of commodities, which works as an affective risk management tool. http://www.ashlaronline.com/

Momentum Trading: High Risks For Higher Rewards

Momentum trading is an important strategy for online stock trading adopted by a number of investors willing to take a higher amount of risk for substantial gains. In this method of trading, one tries to identify stocks which are showing significant momentum and buys them to ride the momentum to make the best gains possible. It is different from value investing because in it generally one would try to buy low and sell high but momentum trader would wait long enough to make sure that the market is indicating continuity of momentum before buying. So, a momentum trader usually buys high and aims to sell higher.

It is of utmost importance for a momentum trader to exhibit high levels of discipline and not be taken in by emotional highs and lows that come along with the market movements. One of the foremost things is to be able to identify the right entry and exit points in this type of online share trading. A number of traders employ moving averages to identify the right entry point by trying to determine market inertia and momentum at a given point of time. With a careful use of moving averages, a trader tries to look for buy and sell signals.




It is important to understand the role played by moving averages. Essentially, they act as directional indicators showing key support and resistance levels which are important to understand the nature of price movements in stock markets within a given time frame. These concepts help deal with the volatility factor to an extent and understand price turnarounds better which is what momentum trading is all about. Basically, support level represents a price level below which the prices for a certain stock has not fallen for a time period of weeks or months represented by a trading chart.

On the other hand, resistance levels are those above which the stock prices have not gone in a certain time period. These are not hardcore concepts which pre-determine what will happen to stock prices but only represent a certain amount of probability based on past movement of prices that they may not push through these limits in near future. However, it is always better for the momentum trader to have a contingency strategy to deal with any unexpected changes in price movements. In short, momentum trading offers a lot of opportunities to make good gains but one must weigh the risks involved against the advantages before using this strategy www.ashlaronline.com.