#30Days30TradingConcepts series on Dhan

Trading is hard. It demands patience, discipline, years of dedication, and knowledge to excel. For beginners, it can be overwhelming initially. To support new traders, we are launching our #30Days30TradingConcepts initiative. Over the next 30 days, we will address all your questions and provide a fundamental understanding of trading. Let’s get started!

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Day 1: What is Trading?

When you engage in trading with companies’ shares, it’s termed as stock market trading.

The key difference is that the stock market involves several intermediaries:
:one: Shares are traded on platforms like NSE, BSE, and MCX.
:two: To trade shares, you need a broker like Dhan.
:three: Transactions are settled through clearing corporations like CCIL.
:four: Once settled, your shares are digitally held in your dematerialized (demat) account with depositories like NSDL or CDSL.

Trading comes in various forms:

:white_check_mark: Day Trading
:white_check_mark: Swing Trading
:white_check_mark: Position Trading
:white_check_mark: Scalping
:white_check_mark: Momentum Trading
:white_check_mark: Algorithmic Trading
:white_check_mark: News Trading
:white_check_mark: High-Frequency Trading

:rocket: This is just the beginning! Stay tuned for our series #30Days30TradingConcepts and delve deeper into the world of trading with us.


Day 2 : hashtag#30Days30TradingConcepts

Indices are like a thermometer for the stock market, offering a quick check of its health. Nifty 50 tracks the top 50 companies on the NSE, while BankNifty tracks the top 12 banking stocks.

Similarly, Sensex and BankEx track BSE stocks. The value of an index represents the average price of its tracked stocks. Indices are important because they provide a snapshot of the market’s performance and allow you to trade and invest directly through ETFs or Mutual Funds, making it easy to invest in a whole sector or market without picking individual stocks. :rocket:

@RahulDeshpande Please do keep updating the day sequence like this. Helps to keep a track.

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Day 3: Types of Investment Account

There are several types of trading accounts to consider when investing in the stock market. An Equity Trading Account is used for trading stocks, while a Commodity Trading Account is for trading commodities like gold and silver. :oil_drum:

An Online Trading Account allows you to place trades through the internet, whereas an Offline Trading Account involves trading through a broker’s office. There are also 2-in-1 and 3-in-1 Accounts, which combine trading, demat, and bank accounts. Additionally, Discount Broking Accounts offer lower fees and advanced platforms, such as Dhan, whereas Full-Service Trading Accounts charge higher fees but provide services like research and financing support.

Day 4: What are Order Types?

The three basic types of stock orders: Market Orders execute immediately at the best available price, Limit Orders specify a price for execution, and Stop Loss Orders trigger to limit losses when a stock reaches a predetermined price.

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Nice reels for education purpose, i want this challenge continue after 30 days

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Apologies for the delay in posting it on community.

Here’s the highlights:

Day 5:

Cover Order :

In Intraday trading, a cover order is a powerful tool designed to help traders manage risk. It’s an order type that includes an entry order and a built-in stop loss, acting as a superhero sidekick for your trades.

When you place a cover order, you simultaneously set an entry price and a stop loss price. For example, if you buy 100 shares at ₹50 and set a stop loss at ₹45, the shares will automatically be sold if the price drops to ₹45, limiting your loss to ₹5 per share. This ensures that you don’t have to constantly monitor the market, as the stop loss order will take care of protecting your position. :chart_with_upwards_trend:

Using cover orders provides additional security, allowing you to set your exit price in advance and letting the order handle the rest. This can be particularly useful for traders who want to avoid significant losses during market volatility.

Don’t forget to follow us so that you don’t miss Day 6! Guess which topic is coming up! :rocket:

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Day 6:

Basket Orders:

Basket Orders not only streamlines your trading process but also offers the benefit of hedging, leading to lower margin requirements and freeing up your capital for other investments—especially useful in options trading. :chart_with_upwards_trend:

On the Dhan platform, you can rearrange the scrips in your basket and select the order execution sequence. Plus, you can create these baskets even after market hours, ready for execution the next day. Save time and energy with Basket Orders and take your trading game to the next level with DhanHQ!

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Day 7:

Risk Associated with Trading

Trading can be intimidating due to various risks, but understanding and managing these risks can lead to more effective and confident trading. Market volatility, where prices fluctuate rapidly, requires traders not to time the market and to use stop-loss orders to limit losses. :chart_with_upwards_trend:

Overtrading increases risk, overconfidence, and potential negligence, so setting daily or weekly trade limits is essential. Additionally, a lack of knowledge about different sectors, companies, and global events can hinder successful trading, making it crucial to stay informed.

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Day 8:

Day 8 : #30Days30TradingConcepts

Difference Between Stocks & ETFs :

Stocks represent an investment in a single company, like buying a Reliance share makes you a shareholder.

ETFs (Exchange-Traded Funds), on the other hand, are like a basket containing a mix of multiple stocks or other assets, similar to a platter with various dishes. For instance, the Nifty 50 ETF includes all the stocks from the Nifty 50 index. :chart_with_upwards_trend:

ETFs offer diversification in a single trade, reducing risk while providing moderate returns, whereas stocks have higher growth potential but come with higher risk. Managing stocks requires active involvement, while ETFs are passively managed, usually tracking an index, and require less effort and lower expense ratios.

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Day 9 : #30Days30TradingConcepts

Gainers, Losers, 52W High and 52W Low :

Gainers are market stars, trading higher than their previous day’s closing price with significant daily increases.

Losers are the underperformers, trading lower than their previous day’s closing price with significant decreases.

52W High is the highest price a stock has reached in the past 52 weeks, indicating peak annual performance, while 52W Low is the lowest price in the same period, showing long-term struggles. :chart_with_upwards_trend:

Understanding these terms helps you grasp market trends and make informed decisions.

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Day 10 : #30Days30TradingConcepts

Lower & Upper Circuit :

Upper Circuit is the highest price a stock can reach in one trading day, and trading stops at this limit to prevent extreme volatility. Lower Circuit is the lowest price a stock can drop to in one trading day, with trading halting at this point to prevent panic selling and a market crash. :chart_with_upwards_trend:

These limits, set based on the previous day’s closing price and typically 5%, 10%, or 20%, help maintain market stability and prevent excessive losses or gains

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