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Short selling is sale of shares which a trader does not actually own at the time of trading. It is a technique used to gain advantage from the falling price of a stock. The selling of stock without owning it is done with an expectation that prices are very much likely to fall further and there will be profit in buying it back at a lower price. This is a very risky technique and is usually practiced by gamblers, arbitragers, hedge funds, speculators. To facilitate traders selling stocks without owning their stock brokers buys stocks and further lends it to them, sell it and credit their demat account and trading account with the proceeds. For this trader needs to pay some transaction fee. Also he has to promise to buy the stock in future to return the loan which is called as covering the short. Advantages of short selling Like many other derivatives contracts short selling allows to earn profit with minimum capital as you only need to pay transaction fee to your stock broke...

A stock warrant give its holder right but do not put any obligation to buy an underlying security at certain price known as exercise price at pre decided future date. It is very much similar to options as an option contract also gives its holder a right to buy/sell a particular underlying security at pre decided date and price, however there is no such obligation to do so. Using  demat account  and trading account traders can trade in such financial instruments. Types of warrants 1) Call Warrant It represents a specific number of shares that holder can purchase from issuer at pre decided price on or before expiration date. 2) Put warrant It represents specific number of shares which holder can sell back to the issuer at pre decided price on or before expiration date. Working of warrants When a buyer wants to buy a warrant then he pays a warrant premium i.e price of warrant in exchange of which he receives right to buy/sell certain number of stocks at strik...

With its past few years performance stock market has proven itself a suitable medium from investment point of view. Also now it is not difficult to trade as using online trading facilities traders can trade easily and this ease has attracted more number of investors to invest their hard earned money in stock market. In a hassle free manner stocks which they trade in are stored in electronic form in their respective demat account . To become a successful trader good patience and knowledge about market is required. Following are some common mistakes which beginners should be aware of and should avoid committing: 1) Putting entire fund in one investment Market is of highly volatile nature and therefore investing entire fund in the same segment is never a wise decision. To manage risk and earn good returns traders needs to maintain a well diversified portfolio. Instead of investing entire fund in either stock, commodity, stock futures, bond try to invest some amoun...

Derivatives are financial contracts which derives its value from an underlying asset like stocks, indices, commodities, exchange rates, currencies and more. It deals with an agreements where two parties: a buyer and a seller agrees to buy/sell at pre decided price and future date. There is no actual value of derivatives as its value is derived from underlying asset. You can use your existing demat account and trading account to trade here as no separate account is needed. Following are the types of derivatives contracts 1) Forward contracts Forward contracts represents an agreement between a buyer and a seller where both the parties agrees to buy/sell as per contract specification. Participants here may face counter party risk as no regulatory body is present. 2) Future contracts Future contracts are standardized forward contracts as they are traded over the exchange and no counter party risk exists. 3) Options Options contr...