Algorithmic trading (algo trading) has revolutionized the financial markets by automating the execution of trades based on pre-defined criteria. But is algo trading good to do?
For many people, algo trading offers great advantages. Algorithms can process a lot of data at a very fast speed and make trades at a very low cost. This makes trading much more efficient and profitable. Algorithms can react faster than humans to market fluctuations, allowing traders to take advantage of opportunities that may otherwise not be available. By not having human emotions taking part, there is less emotional risk in trading.
Algorithmic trading is all about using computer algorithms to take control of the trading process. These smart algorithms separate through market data, spot trading opportunities, and place orders for the trader. They can execute trades at lightning speed and in volumes that far surpass what any human could manage, all while keeping emotions out of the equation—something that often clouds human judgment.
At its core, algorithmic trading relies on predefined rules, like price, volume, or time, to determine the optimal moments to buy or sell a security. These rules can range from straightforward to incredibly intricate, weaving in various market factors, technical indicators, and statistical models.
The growth of algo trading has been driven by leaps in technology. With high-speed internet, enhanced data analysis tools, and superior computational power, it’s become much easier to create, backtest, and roll out complex trading strategies. These tech advancements, along with the increased access to financial data, have opened the doors for not just institutional traders but also retail traders to dive into algo trading.
Nowadays, algo trading makes up a heavy chunk of the daily trading volume in financial markets. For instance, in the U.S. stock market, it’s estimated that over 60% of trades are executed using algorithms. This trend underscores the expanding influence of automation in shaping the global financial landscape.
One of the standout perks of algorithmic trading is its speed. Algorithms can analyze massive amounts of market data in real-time and execute trades in the blink of an eye. On the flip side, human traders are limited by their cognitive abilities and can’t react nearly as fast. This speed advantage lets algorithms capitalize on even the tiniest price discrepancies, raking in profits that would be tough to match with manual trading.
Human traders often let their emotions, like fear or greed, cloud their judgment, which can lead to some pretty poor investment decisions. On the other hand, algorithmic trading takes that emotional bias out of the equation. Since algorithms stick to strict, predefined rules, they make trades without getting caught up in the fear of losing money or the temptation to chase after big gains. This results in a more disciplined and consistent approach to trading.
Algo trading systems can be backtested using historical market data, which is a fantastic way for traders to test their strategies without any risk before putting real money on the line. Backtesting helps pinpoint which strategies work best in various market conditions. Plus, algorithms can be fine-tuned and adjusted continuously to keep up with the ever-changing market landscape.
With algo trading, traders can easily diversify their strategies by managing multiple trades at the same time. Algorithms allow them to invest in a range of markets and securities all at once, which helps spread the risk across different assets. This diversification is key to lowering the overall risk of a trading strategy.
Automated systems make trading more efficient, which in turn cuts down on transaction costs. Algorithms can execute trades faster and at lower costs than humans can, especially when you factor in things like bid-ask spreads, slippage, and commissions. For high-frequency traders, those small savings can really add up to significant profits over time.
Algo trading opens the door to executing complex strategies that would be tough for humans to handle manually. For instance, strategies like statistical arbitrage, market making, or pairs trading require quick analysis of huge amounts of data and the ability to make multiple trades simultaneously. These strategies can be effectively carried out through algorithmic trading systems.
Algo trading can be a smart move, but it really depends on what the trader is aiming for, their resources, and their level of expertise. For institutional investors who have access to cutting-edge technology and substantial capital, algorithmic trading can be an incredibly effective way to boost efficiency and profits. On the flip side, retail traders need to think carefully about the costs, complexities, and risks that come with algorithmic trading.
In short, algorithmic trading isn’t a one-size-fits-all approach. Traders must grasp the technology, recognize the potential risks, and thoughtfully evaluate whether the advantages outweigh the hurdles. By doing this, they can make well-informed choices about incorporating algorithmic trading into their investment strategies.
Amid the COVID-19 pandemic, technology has made a great change in the day to day life of a person, Across the globe, everyone suffers and faces the worst situation.
At the same time life of a common person changed a lot as everyone shifts towards an online portal. From entertainment to regular classes, From assignments to regular office tasks, all the things have shifted towards an online portal.
But this sudden change was not easier to adapt by everyone not every person is using to of it.
But this pandemic brings a revival in the technology sector, and now slowly every business is shifted towards online mode. As the things are been made much easier now and will make the user very effective in its working as it consumes less time with faster speed to perform any task from anywhere.
This pandemic shows us the importance of technology which turns out as a big game-changer at that phase of time and continues to deliver the best till now.
It not only the lives of every individual has changed but it also brings a revolution in work from home culture earlier its been observed that only professionals from IT background works from home, But now the things are changed everywhere even a primary school teacher is teaching on an online platform.
Now imagine our lives without all these facilities will it be possible for us to survive at the time of the covid-19 pandemic. The change we all gone through has given a booster dose to the Technology sector around the globe.
The National stock exchange raised around 90.59 % from a low of 13108 to 27524 in 1 year from the bottom made last year in March. This recovery shows how quickly we adopt the new technology in our day-to-day life.
In the same manner, the major IT companies and their stock have also surged from the very bottom to an unimaginable price rise in just one year.
Here are some top gainers of the tech sector who outperform in the last year.
It is a form of telecommunication between computers where they exchange data with a data link. Computer nodes or hosts can access, create, delete and alter data that is on this network. If a device can transmit information to another device, then they are considered to be networking.
Company Name:- D-Link (India)
Business:- A global leader in the design, manufacture & marketing of advanced networking, Broadband, digital voice, and data communication solutions across the globe.
Returns during a pandemic:- D-link ( India) has given a 35.85% return from its 52 week low of Rs 67.30. Made a high of Rs 136.
IT - Software:- The system software is a collection of programs designed to operate, control, and extend the processing capabilities of the computer itself. System software serves as the interface between the hardware and the end-users.
Company Name:- Tata Consultancy Services Ltd
Business:- TCS provide a wide range of information technology-related products and services including application development, business process outsourcing, capacity planning, consulting, enterprise software, hardware sizing, payment processing, software management, and technology education services.
Returns during a pandemic: TCS has given a 59.83% return from its 52 week low of Rs 1867. Made a high of Rs 3358.80.
Company Name:- Infosys Ltd
Business:- Infosys provides software development, maintenance, and independent validation services to companies in finance, insurance, manufacturing, and other domains. One of its known products is Finacle which is a universal banking solution with various modules for retail and corporate banking.
Returns during a pandemic: Infosys has given a 99.83% return from its 52 week low of Rs 647. Made a high of Rs 1480.
Company Name:- Wipro
Business:- Wipro Limited is a provider of IT services, including Systems Integration, Consulting, Information Systems outsourcing, IT-enabled services, and R&D services.
Returns during a pandemic: Wipro has given a 155.1% return from its 52 week low of Rs 159.60. Made a high of Rs 511.95.
Company Name:- HCL Tech
Business:- HCL Technologies Ltd is a leading global IT services company that helps global enterprises re-imagine and transform their businesses through Digital technology transformation. The company is primarily engaged in providing a range of software services business process outsourcing and infrastructure services.
Returns during a pandemic: HCL has given a 76.80% return from its 52 week low of Rs 502.10. Made a high of Rs 1073.55
Company Name:- Tech Mahindra
Business:- Tech Mahindra is an Indian multinational company that provides information technology (IT) and business process outsourcing (BPO) services.
Returns during a pandemic: Tech-M has given a 91.2% return from its 52 week low of Rs 490. Made a high of Rs 1081.35
Apart from this major IT giant other Midcap IT companies have also given tremendous return in the last year:-
Company Name:- Larsen & Turbo Infotech Ltd
Business:- Larsen & Toubro Infotech Limited (L&T Infotech) is a global technology consulting and digital solutions company helping more than 300 clients succeed in a converging world. It provides the winning edge to the clients by leveraging Business-to-IT Connect and deeply committed people.
Returns during a pandemic: LTI has given a 150.17 % return from its 52 week low of Rs 1510. Made a high of Rs 4499.90
Company Name:- Mind Tree Ltd
Business:- Mindtree delivers digital transformation and technology services from ideation to execution, enabling Global 2000 clients to outperform the competition. "Born digital," Mindtree takes an agile, collaborative approach to create customized solutions across the digital value chain.
Returns during a pandemic: MindTree has given a 136.7 % return from its 52 week low of Rs 811. Made a high of Rs 2275.10
Company Name:- Mphasis Ltd
Business:- Mphasis Limited is an IT services company based in Bangalore, India. The company provides infrastructure technology and applications outsourcing services, as well as architecture guidance, application development and integration, and application management services.
Returns during a pandemic: Mphasis has given a 150.50 % return from its 52 week low of Rs 693.55. Made a high of Rs 1835.95
Company Name:- Oracle Financial Services Software Ltd
Business:- It is a retail banking, corporate banking, and insurance technology solutions provider for the banking industry. It also provides risk and compliance management, and performance measurement applications, as well as accounting, business process management, human resources, and procurement tools.
Returns during a pandemic: OFSS has given a 50.95 % return from its 52 week low of Rs 2208.80. Made a high of Rs 3742.40.
Company Name:- Tata Elxsi
Business:- Tata Elxsi is amongst the world's leading providers of design and technology services for product engineering and solutions across industries including Broadcast, Communications, and Automotive. It provides technology consulting, new product design, development, and testing services.
Returns during a pandemic: Tata Elxsi has given a 403.44 % return from its 52 week low of Rs740.60. Made a high of Rs 4089.70
Company Name:- Coforge Ltd (NIIT Ltd Earlier)
Business:- Coforge is leveraging new-age technologies such as artificial intelligence and cloud technologies, allied with industry expertise to transform client businesses.
Returns during a pandemic: Coforge has given a 143 % return from its 52 week low of Rs 1151. Made a high of Rs 3222.
Company Name:- Persistent Systems
Business:- Persistent Systems Limited is a global company specializing in software products services and technology innovation. The company offers complete product life cycle services. The company has the depth of experience in the focused areas of telecommunications life sciences and infrastructure and systems.
Returns during a pandemic: Persistent System has given a 371.05 % return from its 52 week low of Rs 460. Made a high of Rs 2238.65.
Company Name:- Tanla Platforms (Tanla Solutions Earlier)
Business:- Tanla Platforms Limited, previously known as Tanla Solutions Ltd, is a cloud communications company based in Hyderabad, India. The company provides value-added services in the cloud communications space.
Returns during a pandemic: Tanla Platforms has given a 1238.52 % return from its 52 week low of Rs 61.75. Made a high of Rs 1030.
e-Commerce:- E-commerce is the buying and selling of goods or services via the internet, and the transfer of money and data to complete the sales. It's also known as electronic commerce or internet commerce.
Company Name:- IndiaMart Intermesh Ltd
Business:- IndiaMART InterMESH Ltd. is an Indian e-commerce company that provides B2C, B2B, and customer-to-customer sales services via its web portal.
Returns during a pandemic: Indiamart has given a 227.94 % return from its 52 week low of Rs 2036.35. Made a high of Rs 9951.95
Note: Returns can be varied as per the closing rates,
Source:- Money Control & Stock Edge
पिछले सप्ताह कीमती धातुओं मे ऊपरी स्तरों से बिकवाली का दबाव रहा। अप्रैल के महीने के अंत तक आर्थिक आंकड़ों में मजबूती रही जिसके कारण कीमती धातुओं मे दबाव बना। अमेरिकी जीडीपी 2021 की पहली तिमाही में 6.4% तिमाही-दर-तिमाही बढ़ी है और पिछले सप्ताह भर में 553,000 प्रारंभिक बेरोजगार दावे दर्ज किए गए, जो पिछले सप्ताह से कम है। सप्ताह के शुरुवात में अमेरिकी राष्ट्रपति जो बिडेन द्वारा प्रस्तावित 1.8 ट्रिलियन डॉलर का प्रोत्साहन योजना पर निवेशकों की नज़र है। जापान में, मार्च में औद्योगिक उत्पादन में महीने दर महीने 2.2% की बढ़ोतरी हुई और टोक्यो कोर कंज्यूमर प्राइस इंडेक्स में अप्रैल में सालाना आधार पर 0.2% की बढ़ोतरी हुई है। चीन ने शनिवार से शुरू होने वाले एक सप्ताह के अवकाश के आगे वृद्धि दर धीमी दर्ज की है। शुक्रवार को जारी चीनी आंकड़ों के अनुसार अप्रैल के लिए विनिर्माण क्रय प्रबंधक सूचकांक (पीएमआई) घट कर 51.1 पर पहुंच गया और गैर-विनिर्माण पीएमआई घट कर 54.9 पर रहा। जबकि अप्रैल के लिए कैक्सिन मैन्युफैक्चरिंग पीएमआई मे बढ़त दर्ज की गई है। चीन और जापान मे सप्ताह में शुरुवाती अवकाश होने से कीमती धातुए सिमित दायरे मे रह सकती है।
इस सप्ताह प्रमुख अर्थव्यवस्थाओं से जारी होने वाले आंकड़े जिनमे, सोमवार को अमेरिकी मैन्युफैक्चरिंग पीएमआई, बुधवार को एडीपी नॉन फार्म एम्प्लॉयमेंट चेंज और सर्विस पीएमआई, गुरुवार को अनम्पलॉयमेंट क्लेम्स तथा शुक्रवार को पैरोल के आंकड़े प्रमुख है।
इस सप्ताह सोने और चाँदी में तेज़ी रहने की सम्भावना है। इसमें 46300 रुपये पर समर्थन और 47200 रुपये पर प्रतिरोध है। चाँदी में 68000 रुपये पर सपोर्ट और 70000 रुपये पर प्रतिरोध है।
The rate of progress in AI has been very irregular and unpredictable. The global artificial intelligence market size was projected at USD 39.9 billion in 2019 and is expected to reach USD 62.3 billion in 2020, is probably to grow at a compound annual growth rate of 42.2% from 2020 to 2027 to reach USD 733.6 billion by 2027. Organizations are implementing AI for varied business applications.
The technology provides real-time data gathering, forecasting, and analysis for delivering greater insight in industry verticals, like automotive, healthcare, retail, finance, and manufacturing.
The banking, financial services and insurance industry have undergone a dynamic transformation because the industry requires improvement in areas like fraud detection, wealth management and insurance processing.
By implementing AI BFSI firms can meet strategic objectives like improving customer experience, cost and efficiency optimization, delivering personalized services and improving speed-to-market for offerings.
The manufacturing industry deals with vast quantities of knowledge due to the utilization of sensors and networks,93% of companies believes AI is going to be an essential technology so as to drive growth and innovation within the sector.
87% of manufacturers have adopted AI or planned while 83% hold that AI will make a tangible impact on manufacturing and management within the following 5 years.
Software led the synthetic intelligence market and accounted for quite a 39.0% share of the worldwide revenue in 2019, due to prudent improvements in information storage capacity, high computing power, and multiprocessing capabilities to deliver high-end AI software in dynamic end-use verticals.
Machine learning and Deep learning has led the market and accounted for quite a 39.0% share of the worldwide revenue in 2019, due to its complicated data-driven applications, including text/content or speech recognition.
As an example, in March 2018, NVIDIA Corporation announced a strategic partnership with Arm Limited to bring deep learning inference to the web of Things (IoT) and consumer electronics devices within the global marketplace.
The advertising and media segment led the market and accounted for quite a 20.0% share of the worldwide revenue in 2019. The healthcare sector is gaining a number one share supported use-cases, like robot-assisted surgery, dosage error reduction, and automatic image diagnosis. The BFSI segment includes financial analysis, risk assessment, and investment/portfolio management solicitations.
North America dominated the AI market and accounted for over 42.0% share of worldwide revenue in 2019. This is often due to the presence of leading players within the region, a strong technical adoption base, and the availability of state funding. The Asia Pacific is estimated to witness significant growth in the market for artificial intelligence.
In September 2019, IBM Watson Health signed an agreement with Guerbet, for the event of an AI software solution for cancer diagnostics and monitoring. Moreover, in January 2019, Intel Corporation announced its partnership with Alibaba Group Holding Limited (China), to co-develop AI-powered tracking technology to be deployed at the Olympic Games 2020.
Some key players operating within the AI market include Atom wise, Inc.; Life graph; Sense.ly, Inc.; Zebra Medical Vision, Inc.; Baidu, Inc, Google LLC; Intel Corporation; and Microsoft Corporation etc.
Globally there is a trend of startups growing in the market. Hence key players are taking several strategic initiatives, such as mergers and acquisitions, partnerships, and collaborations with other major companies so as to offer customized artificial intelligence solutions to fulfil the rising needs of the industries and to expand globally in order to enhance their offerings these players are acquiring startups.
Investments that are rising in research and development by leading players also will play an important role in increasing the uptake of AI technologies.
For example, the Chinese tech giant Alibaba's research institute Damo Academy has developed a diagnostic algorithm that can detect new coronavirus cases with the chest computed tomography (CT) scan. The AI model utilized in the system has been trained with the sample data from over 5,000 positive coronavirus cases.
In December 2019, Intel Corporation has completed the acquisition of Habana Labs Ltd., an Israel-based deep learning company. This acquisition is estimated to strengthen Intel Corporation’s AI portfolio and encourage its efforts within the AI silicon market.
The retail industry is expected to grow significantly: the expectation is that 80% of executives will adopt AI-powered intelligent automation. It is because of customer changing habits. Artificial intelligence technology in retail offers various benefits such as predictive merchandising, programmatic advertising, market forecasting, in-store visual monitoring & surveillance, and location-based marketing.
This is likely to boost cloud adoption. On-premises has led to gain maximum shares. Owing to less implementation expense cloud deployment is gaining traction. Eg is amazon which offers easy image recognition, chatbots, etc. so cloud deployment would be in demand in few years.
Use of machine learning, NLP and computer vision: machine learning is gaining popularity because of precision in analysis. Which the increasing application for chatbots and virtual assistant is boosting demand for NLP technology. Ml technology is required mostly in healthcare sectors computer vision is another one.
The fusion of air and cloud computing can help to grow market segments. Companies with fewer funds can rely on cloud computing for the services. For eg.veritone has use cloud computing for building it AI operating system. Startups are using fusion to expand globally.
Increasing use of AI will increase chances in the service market: three components of the market are taken into account they are: hardware, services and AI software. Hardware will grow because of semiconductor companies.
Enterprises will be enabled to increase the use of AI of network optimization to optimize their inventory by making orders that supported the estimated demand, current inventory level, and time interval.
Al can help telecom providers to create self-optimizing networks (SONs), which may provide network operators with the power to automatically optimize their network quality counting on traffic information by zone and region. Poor availability of skilled workforce and high cost of implementing AI.
A major challenge for the expansion of Al within the telecommunication industry is that the shortage of technical expertise among the workforce.
Enterprises implementing Al are required to possess sound knowledge on working with Al software platforms and periodic servicing necessities to make sure smooth operations.
Consumer stocks remained in demand by many investors. As per the retail sales figure data, it was reported that the retail sales surged by 9% in March, which is the highest percentage in 10 months.
It is said that for the first time unemployment benefits were at the lowest levels. Experiencing all the things above, we consider the top consumer stocks being the most active today.
Before getting deeper into the consumer stocks, let’s take it at a glance.
Consumer stocks are basically a sector of stocks that includes companies that produce consumer staples.
Nowadays, every individual depends on consumer staples. This includes all the products that we use on a day to day life such as food, beverages, cleaning products, personal hygiene.
As these goods are used in day to day lives, these are purchased irrespective of the economic condition of the country. Because they are considered as the essential items.
There are different forms of consumer stocks. One form of the consumer is discretionary stocks.
These include hotels, apparels, restaurants etc. While normal consumer stocks provide essentials that are connected with the daily activities of an individual, the latter do not provide essential goods.
Instead, they offer services for consumer’s requirements rather than what they want.
Investors are now paying attention to these stocks. If we take a look at the stock market, then the first quarter of the 2021 earnings season seems to be picking up speed. Stocks like HUL, ITC and Nestle have shown growth.
Investors focus on these stocks particularly because of the reason that they deal in essentials. The Covid-19 pandemic has not gone completely and hence investors prefer these consumer stocks which will not show a deep fall even if the situation gets worsened.
Overall, we find that investors are seeking to invest in consumer stocks as they are high in demand these days.
When it comes to investing in stocks, one of the main concerns that arrive in everyone’s mind would be the stability stocks hold during economic crises.
When it comes to consumer stocks, they are considered the safest instruments for investors as these essentials never go out of need. The demand for these goods rises during a time of crises.
Also, due to heavy demand by consumers, these companies generate consistent profits even in the time of weak economic conditions.
Another benefit of investing in such stocks is: these consumer stocks pay dividends to the stockholders. They are defensive enough to outperform other stocks even during bear markets. This is mainly due to the essential nature of consumer stocks.
For example, in the recent time of pandemic, numerous consumer stocks thrive as consumers tend to stock up on essentials.
This in return, increases the valuation of companies producing consumer products and provides investors with attractive returns.
Last but not the least, another major advantage of having such stocks is their stable revenues irrespective of the economic condition and challenges.
Here are the best consumer stocks that you should never miss in 2021
1. HUL (Hindustan Unilever Limited)
HUL is the top giant and currently considered the leading company in the consumer goods market. With its great and outstanding financial performance over the last years, the company’s stocks still provide attractive returns to its shareholders.
Last month i.e in March, the company had recorded a 52 week high of Rs Rs 2614.30 and the lowest being Rs 1750. If we talk about the market size of HUL, then it is Rs 5,08,113.69 crore that proves the company can provide huge earnings to its shareholders in the future.
2. ITC (Indian Tobacco Company)
ITC is a renowned name in the FMCG sector in India. It’s a well-reputed tobacco company that diversified into different sectors including FMCG, paperboards, printing, personal care products, hotels, commodities, ghee, luxury chocolates, frozen food products and many more.
The company provides a huge dividend to its shareholders. The dividend yield of ITC is 4.33% and also holds liquid cash and liquid investment of Rs 35,600 Crores.
According to sources, ITC gains 62% of its revenue from the tobacco business with hotels providing the least of its revenue of 3.88%
3. Nestle India Limited
Nestle is an Indian subsidiary of the swiss based MNC. Bagged the third position after ITC, the company has a market capitalisation of Rs 1,59,155,52 Crores. Of total capitalisation, 40% of its revenue is generated from milk, followed by beverages which are 12%, 28% from dishes and the remaining 13% from chocolates and confectionaries.
Investors should not miss out on investing in Nestle as the company hits a high at Rs 18.369.95 and the lowest at Rs 12,200 over a span of 52 weeks.
From the above points, Nestle has turned out to be a smart investment choice.
4. Britannia
Britannia is considered one of the oldest and top leaders of biscuit companies in India. It is also referred to as the powerhouse of the consumer goods sector. The company has a total of 21.7 lakh outlets in the country. If we talk about the popular brands of Britannia which are the first choice of every individual is Tiger, Good day, Nutri Choice, Milk Bikis and Amrie.
Investors also need to focus on Britannia as the company’s sales have grown at a CAGR of 8.10% and the PAT has grown at a CAGR of 20%.
The company recorded a 52 week high of Rs 4010.00 and 52 week low being Rs 21,00.
The market capitalisation of the company is Rs 89,582.63 Crores.
5. Godrej Consumers Product Limited
The company is the market leader in hair color and other segments. The company has recorded a 52 week high of Rs722.0 and a low at Rs 425.10. Godrej has a market capitalisation of Rs 66,624.36 Crore.
Another advantage of investing in Godrej stock is that the company also offers a dividend of 1.15% which is quite good as compared to the other investors.
Needless to say, consumer stocks perform best irrespective of the economic cycle and hence it would be ideal if you invest in these stocks. The companies are the top leaders in the FMCG sector and that's the reason they never dissatisfy their customers.
The stock market offers various trading platforms for investors to trade in the stocks without any hassle. This is the place where individuals invest their funds for the long term. However, there are other traders too, who enter these markets with the purpose of making small quick profits by trading for minutes or hours.
These traders are known as scalpers, who believe in making immediate profits rather than waiting for the long term.
Before getting a dig deep into this, let’s understand how scalping can be used to collect huge profits through small trading techniques.
If you have heard the name scalping, you would be wondering what these scalpers are and how they achieve profits from the deal.
Scalping is a short term trading strategy used to achieve profit from the volumes of trade placed, rather than focus on maximizing capital gains on each trade.
These are short trading styles predominantly used in intraday trading. Scalpers trade frequently and in small trading sessions.
The name scalping got famous due to the traders who adopt such styles - they quickly enter and exit from the market by making small profits from a large number of trades, throughout the day trading.
A scalp trader usually follows a strict exit policy as one huge loss could eliminate all the profits made throughout the day. Therefore this trading style requires discipline, stamina and decisiveness.
If one possesses these qualities with the right strategy, he/she can become a successful scalp trader.
Scalp traders often enjoy the trading style that it requires. However, to achieve successful deals, you are required to execute numerous technical trading techniques to identify profit opportunities in the market.
Before answering the question, how does scalping work, lets understand the trading mechanism of scalping.
Scalp trading is a short term trading style that includes buying and selling of assets multiple times to book profit. Trading multiple times allows a trader to earn from the price difference.
It involves buying an asset at a lower price and selling at a high or vice versa.
Scalpers mostly try to find out the highly liquid assets that are volatile in nature i.e. these assets do frequent price changes during the day trading. Do remember, for scalping, it is highly important for an asset to be liquid, only then will you book profits throughout the day or otherwise you may face huge losses.
Scalpers believe it is easier to make money through small deals because it is less risky from the market volatility perspective.
There are other traders too, who hold onto their position for some weeks or months for making a huge profit. However, scalpers believe in making multiple profit opportunities within a small span than the bigger one.
Here some principles of scalping that every trader needs to follow:
Make Small Moves:
Small moves are easier to obtain than large moves. For making a huge profit, the stock market has to be insatiable i.e. it requires a high imbalance between supply and demand. In such situations, small prices are comfortable to deal with.
Small Moves happen Frequently:
Small moves in the stock market always work the best. Even many experienced traders use small moves when they see the market is quiet for some time.
Lower exposure Limit Risks
A brief exposure in the market reduces the chances of running into an adverse condition.
Trading methods used by Scalpers
While other trading styles like position trading use fundamental analysis, scalp trading however depends on technical analysis. This is because technical analysis includes identifying the historical price movements of assets and comparing them with the current asset’s price. For this, scalpers use different charts and patterns.
The comparison of historical data with the current data helps scalpers observe patterns and predict future price movements with ease.
Scalpers use charts and patterns and observe them with a specific timeframe. In other words, they do analysis in small time frames which are the shortest of all trading styles.
An intraday trader uses five minutes or 10 minutes trading charts to make five deals a day. Scalpers, on the other hand, uses a time frame of 5 to 10 seconds to make 50 to 100 trades during the day.
Scalpers play smartly with the trading, also they use several market’s tactics to achieve a high speed of trading. Such tactics are the market’s time and sales - a record of buying, selling and cancelled transactions.
Firstly, scalpers need to minimize the usage of multiple technical indicators. Trading indicators are basically the plotted lines on the price charts that help traders to identify whether to buy or sell assets.
For a scalp trade, it would be beneficial if you invest in profitable stocks as it will help you achieve more profits throughout the day. Also, the quality number of trades in a single day makes your margin requirement and risks reduced.
Margin is the borrowed funds that brokers lend to the traders so that they can buy securities more than they afford.
As a scalp trader, it is important to master certain strategies that will give you bountiful benefits of profit booking. Traders apply multiple strategies which confuse them with which strategy should be used or which one is not?
For example; you made 10 trades and used various methods to execute them. Now you would get confused as to which strategy worked well for you? Therefore it would be ideal if you use 2 or 3 strategies and execute your trade order.
Scalping is a short term strategy that is not limited to futures alone. In fact, you can use scalping trading in forex and stocks as well.
The preferred market for scalping are:
Reducing losses is one of the most significant concerns a trader must pay attention to. A scalper trade in many traders in a single day. Some scalpers book huge profits from it where others suffer a loss. Therefore, a scalper needs to learn to cut down the losses in every losing trade to mark a good profit in scalping.
Scalping is a process where a trader uses short time frames, chart plans to book a profit throughout a day. Scalping is a difficult trading process that demands dedication, speed and discipline to execute scalp deals.
If you are an experienced trader who knows how to trade intraday and aims for short term trading, you can go for scalping trading. However, if you are not aware of intraday trading strategies and wants to invest in the long run, scalping is not your cup of tea. Choose wisely and execute your trades according to your trading styles.
The second wave of coronavirus seems to be very dangerous as it has badly hit the Indian economy. With new cases rising every day, state governments immediately came into action and imposed strict restrictions to curb the resurgence.
Although the curb is weaker than last year's pandemic, it somehow has started to affect several business activities.
Like last, the second wave of COVID 19 would heavily impact India’s Gross Domestic Product (GDP) growth in the coming months.
If we talk about business activities and the economy then the Indian stock market is also not untouched by this.
However, pessimism hasn't come up with the equity trading market so far. If you look at the last two month’s data, you will get to know that the NIFTY50 gets down by only 7% from its all-time high of 15,431.75.
Then what's the reason behind the market afloat?
Despite the critical situation across the country, analysts point towards the two factors that still maintain complacency in the stock market.
Several traders and expert analysts said that the global peers are doing well and that's the reason the Indian stock market trading is also performing well.
In other words, Global equity markets in the US have been in a good condition which is the main reason behind the drifts of the Indian stock market, The S&P 500, Dow Jones index touched an up of 4,195 and 34,200, this month.
It clearly shows that global equity markets are performing outstanding well and that makes a positive rub off on Indian equity markets as well.
As of now, we have not experienced a major decline in Indian equities despite having one of the highest infection rates in India - said Mr Sanjay Mookim, Research Head, JP Morgan Chase.
Besides, the hindsight of Indian investors makes the equity market more stable than before. The second wave reminds them of the mistakes they made in last year’s pandemic.
Therefore, they clearly say, even if the index goes down, they also go up. Also, last year, many fund managers made a huge mistake by selling a majority of stocks, this year they wouldn't.
Also, we have seen the equity market has bounced back from its position and hence the aggressive selling has not been done by many people, this time, Majoom said.
Naveen Kulkarni, CEO at Axis Securities Ltd, stated that “Prior experience shows how the stock market made a massive comeback post last year’s pandemic and therefore we don’t expect investors to offload equities hugely this year. This is because as the vaccination picks up the pace, the curve will flatten.
When a nationwide lockdown was announced in March 2020, the Nify50 went down by 13%. After 1 year, shares have grown up by double or sometimes even thrice. A recent analysis done by Mint report, in Nifty500 index, the stocks have shown the growth of more than 50% than last year and 247 stock’s price goes up by more than 100%, which is unbelievable and beyond the expectations of Indian investors.
Besides, the positive factors by global markets, RBI also put its eye on the Indian stock market. The monetary policy members of RBI still get worried about the economic growth. They are not in a favor of complete lockdown in the country.
Experiencing the rising cases of Covid positive, FIIs have sold equities worth $934 million so far this month.
Analysts suggest that your portfolio along with asset allocation tells your gain and loss. If you put loads of equity stocks in your portfolio, then it can also be quite risky as the stock market is seeing a bit of a downward trend. Therefore, it is suggested to add some growth stocks to your portfolio as it will minimize your risks.
While the second wave of COVID poses challenges to the ongoing economic recovery, consumers and businesses have adapted to the new normal, and lockdowns are likely to be localised; hence, we do not expect this wave to derail the economy. Therefore, we don't expect any significant impact on aggregate earnings.
Amidst this second wave of the pandemic, some stocks are still performing exceptionally well. Here is a list of stocks to Bet Upon:
1. Divis Laboratories
Divis Laboratories is considered one of the leading manufacturers of Active Pharmaceutical ingredients (API) in the world. As per the reports, the company’s growth looks promising due to the diversification from China into other countries including India.
As many global players try to minimize the dependencies on China and prefer In dia, companies like Divis Laboratories remained well placed to capitalise on such opportunities.
Also, the company announced the construction of the Divis Unit-III Facility at Kakinada, East Godavari District, Andhra Pradesh.
2. CDSL
CDSL stands for Central Depository Service Limited. The company facilitates the transaction and holdings of securities in Demat form and settlement of trade which are executed on a stock exchange.
Other services include KYC services in respect of investors to capital market intermediaries, holding insurance policies in electronic form and other online services such as e-Locker, e-voting etc.
If we talk about the market share of CDSL, it has witnessed a massive growth from 14% in FY14 to 51% in FY2020 in the market share.
3. Dr. Reddy’s Laboratories
We can't ignore the performance of Dr Reddy’s Laboratories. Amidst the pandemic, the company has managed to generate revenue of Rs 4,930 Cr in FY21 which is up by 12%.
4. HDFC Bank
The bank’s strong fundamentals with good quarter to quarter growth makes HDFC one of the best choices among Indian retail investors. The company’s operating profit goes up by 22.83 per cent. Good revenues (up 29.10 %) and the approaching summer seasons are the good factors of this stock.
The company gave a strong performance, with its operating profit going up by 22.83% whereas the revenues (29.10%) and profit (22.35%) also showed a positive side.
Volta's growth in FY21 is also fascinating. Its operating profit (53.44% up), revenue (22.14% Up), gross profit (up 22.35%) and a reduction of interest expense make this stock is one of the highest-value stocks in the Indian stock market.
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