Depending on your risk taking capacity and your and the money you have you can indulge in different ways of trading. If you think long-term you can even become an investor and keep buying as many good companies as you want.
Here are a few different approaches that you can adopt.
Cash or delivery-based trading: Trading done with the intention of taking delivery of the shares unlike day-trading where you buy and sell on the same day.
Margin trading: Wherein you can trade up to 3 to 4 times the amount available in your savings account. Say you have Rs 50,000 lying in your savings account, you can trade up to Rs 2,00,000, ie, you can buy or sell shares up to Rs 200,000 (that is 4 times the amount in your savings account).
Certain brokerages also provide limits up to 25 times the amount lying in your account. But the catch is that in margin trading you have to square off your transaction on the same day, ie, if you have bought shares in margin segment then by the end of the trading session, you have to sell them off, so that there are no outstanding positions in your trade.
If you do not do so, then the system automatically squares off the position. All brokerages have a list of stocks, which are available for margin trading. One cannot do margin trading on all shares.
Buy today sell tomorrow (BTST): You also have an option, in certain stocks, to buy them today and if sell them the next day if you are not making a profit on the trading day itself. You can do this without the receipt of purchased shares in your demat account.
Limit order: You can buy or sell shares at a price as defined by you. When your limit price is reached, your order will get executed automatically.
Futures and options: Through online trading you can also engage in derivatives trading, that is trading in futures and options.
Investments in mutual funds: You can also invest in mutual funds using online trading. Here just like shares, the amount is debited or credited in your account and the units are accordingly credited or debited in or from your account. You can also perform other options like systematic investments plan. Many broking houses do not offer systematic transfer plans (STP) so check it out.
IPOs: You can also apply for IPOs through online trading.
Commodities: You can also trade in commodities through the commodities exchange like the Multicommodity Exchange of India or National Commodity Exchange.
If you think you have become a master of online trading now then think again. For you still have to know the pros and cons of trading online.
Photograph: MIKE CLARKE/AFP/Getty Images
Also read: How to invest when the markets are down
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