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  • Algo Trading – Understanding the Concept with Examples

    Deepak Sharma 17 Mar 2021

    What is Algo Trading?

    Algorithmic trading is a method that uses computer codes to develop a program that follows a defined set of instructions to place a trade. These sets of instructions are called algorithms which are based on timing, price, quantity, or any mathematical model. Algorithm trading is also known by other names like automated trading, black-box trading, or algo-trading.

    Apart from more profit opportunities for the trader, algo-trading also renders markets more liquid and makes trading more systematized by eliminating the impact of human emotions on trading activities. This can save you valuable time and you can execute the trade instantly instead of scanning the markets all time.

     

     

    A study in 2019 reveals that around 92% of trading in the Forex market was made by trading algorithms.

    It is widely used by investment banks, mutual funds, hedge funds, and pension funds that may need to circulate execution of a larger order or perform trades too quickly for human traders to react to. 

    Note: For becoming a successful Algo trader, one should have a proper understanding of three domains namely – 

    • Statistics & Econometrics

    • Financial Computing and 

    • Quantitative Trading Strategies

     

    Difference between Automated Trading and Algorithmic Trading

     

    Though algo trading and automated trading systems are often used synonymously, there is a small difference between the two.

    Automated trading usually refers to the automation of manual trading through stops and limits, which will automatically close out your positions when they reach a certain level, regardless of whether you are at your trading platform or not.

    Algorithmic trading refers to the process in which a trader will develop and refine their codes, to scan the markets and enter/exit trades based on the on-going market conditions.

     

    5 strategies to buy and sell stocks using algo trading - The Economic Times

     

    Why use algorithmic trading?

     

    Algo-trading provides the following benefits:

    • Trades are executed at the best possible prices.

    • Trade order execution is instant and accurate 

    • Simultaneous automated checks on multiple market conditions.

    • Using available historical and real-time data algo-trading can be backtested for viability.

    • fewer chances of human errors based on emotional and psychological factors.

    • Reduced transaction costs.

    • Minimize market impact  

     

    How Algo Trading Minimizes Market Impact

    Algorithmic Trading Market

     

    A massive trade can potentially shift the market price, also known as a distortionary trade as it distorts the usual market price. To escape falling in such a situation, traders generally open large positions that may move the market in steps.

    For example, an investor wanting to buy one million shares in ‘ABC’ company might buy the shares in batches of 1,000 shares. The investor might buy 1,000 shares every ten minutes for an hour and then evaluate the impact of the trade on the market price of the company stocks. If the price remains constant, the investor will go on with his purchase. Such a strategy allows the investor to buy company shares without increasing the price. 

    However, the strategy comes with two main drawbacks:

    • If the investor needs to pay a fixed fee for every transaction he makes, the strategy might incur significant transaction costs.

    • The strategy takes a good amount of time to complete. In this case, if the investor buys 1,000 shares every ten minutes, it would take him just over 166 hours (more than six days) to complete the trade.

    Algorithm trading can solve the problem, by buying shares and instantly verifying if the purchase has had any impact on the market price. It can significantly reduce both the number of transactions and the time to complete the trade.

     The Growth And Future Of Algorithmic Trading

     

    How Algo Trading helps different investors

    Algo-trading is used by different types of investors for many forms of trading and investment activities including:

    1. Short-term traders and sell-side participants which include market makers, arbitrageurs, and speculators benefit from fast and automated trade execution. Also, algo-trading helps in creating sufficient liquidity for sellers in the market.

    2. Mid- to long-term investors or buy-side firms includes mutual funds, pension funds, insurance companies—use algo-trading to purchase stocks in large quantities when they do not want to influence stock prices with discrete, large-volume investments.

    3. Systematic traders include trend followers, hedge funds, or pairs traders find it much more efficient to program their trading rules and let the program trade automatically.

     

    WHAT ARE THE ALGORITHMIC TRADING STRATEGIES?

    HR Strategies For Dummies: 4 Elements That Better Be Part of It – TLNT

    • Trend-following Strategies 

            Trades are executed based on the desirable trends, which are easy and straightforward to implement through algorithms without touching predictive analysis. Using 50-day and 200-day moving averages are common trend-following strategies.

    • Arbitrage Opportunities

    Buying a dual-listed stock at a lower price in one market and at the same time, selling it at a higher price in another market bids the price differential as risk-free profit or arbitrage. Implementing an algorithm to identify such price differentials, efficiently allows profitable opportunities.

    The same arbitrage opportunity can be replicated for stocks versus futures instruments as price differentials do exist very often. 

    • Mathematical Model-based Strategies

    Valid mathematical models, such as the delta-neutral trading strategy, allow trading on a combination of options and the underlying security.

    • Index Fund Rebalancing Strategy

    Index funds have defined intervals of rebalancing to bring their holdings equivalent to their respective benchmark indices. This creates profitable opportunities for algo traders, who make capital on expected trades that offer 20 to 80 basis points profits depending on the number of stocks in the index fund, before rebalancing. 

    • Volume-weighted Average Price (VWAP) Strategy

    The target here is to execute the order close to the volume-weighted average price (VWAP). This strategy breaks up a large order and releases dynamically identified smaller chunks of the order to the market using stock-specific historical volume profiles.

    • Trading Range (Mean Reversion) Strategy

    The trading range or mean reversion strategy is based on the concept that the high and low price of assets is a temporary event that reverts to their mean value/average value periodically. Identifying and defining a price range as well as implementing an algorithm based on it allows trades to be placed automatically when the price of an asset breaks in and out of its defined range.

    • Time Weighted Average Price (TWAP) Strategy

    Here, the purpose is to execute the order close to the average price between the start and end times thereby minimizing market impact. This strategy breaks up a large order and releases dynamically identified smaller chunks of the order to the market using evenly divided time slots between a start and end time. 

    • Implementation Shortfall Strategies 

    This strategy targets minimizing the execution cost of an order by trading off the real-time market, thereby saving on the cost of the order and benefiting from the opportunity cost of delayed execution. 

    • Percentage of Volume (POV) Strategy

    Until the trade order is filled, this algorithm continues sending partial orders according to the defined participation ratio and according to the volume traded in the markets.

     

    • Price Action Strategy versus Technical Analysis Strategy

    There are some more algorithmic trading strategies broadly divided as Price Action Strategy, Technical Analysis Strategy, and a combination of both. However, most traders choose the price action strategy or the technical analysis strategy, only a few of the traders use a combination of them.

     

    • A Price Action Strategy applies price data from previous open/close or high/low levels of a candlestick chart and the algorithm would trigger a buy or sell order if similar levels were achieved in the future 

     

    For example, You can create an algorithm to enter buy or sell orders if the price rises above point A, or if the price falls below point B. This is a commonly used algorithm by scalpers who want to make a series of small and instant profits throughout the day on highly volatile markets, a process known as high-frequency trading (HFT).

     

    • A Technical Analysis Algo Trading Strategy is concerned with technical indicators such as Bollinger bands, stochastic oscillators, MACD, the relative strength index, and many more. 

     

    For example,  You can create algorithms based on Bollinger bands to open or close trades in highly volatile markets. With this strategy, you can create an algorithm to act on the parameters of these indicators, such as closing a position when the market is spiking high fluctuation.


     

    • A combination algorithmic trading strategy uses both price action, and technical analysis, to confirm suspicions about price action by analyzing charts with indicators. You can configure your combination strategy as per the market trend, the size of the trade, the time frame, and the different indicators that the algorithm is designed to use.  ​​​​​​​

     

    Technical Requirements for Algorithmic Trading

    The following are technical requirement required for trading an algorithm:

    • First and foremost, having full-fledged computer programming knowledge or hired programmers, or pre-made trading software.

    • The ability and infrastructure to backtest the system once it is built before it goes live on real markets.

    • Access to market data feeds that will be monitored by the algorithm for opportunities to place orders.

    • Historical data should be available for backtesting, based on the complexity of rules implemented in the algorithm.

    • Network connectivity and access to trading platforms to place orders.

     

    Bottom Line

    Now that you have gained a basic understanding of algorithm trading, and its strategies, and how it is used by algo traders, you are all set to go ahead and start investing wisely. 

    Learn in detail about Algorithm Trading, in our Artificial Intelligence Automated Algorithm Trading Course provided by NIWS, the best all-in-one training platform of the Stock Market. At NIWS, we have our expert faculty from mathematics and computer science backgrounds who share their experiences and strategy ideas/tactics with you during the course.


     

    Get Placed, Learn More and Implement On the Job

    Become A Pro Algo Trader | Start Your Own Algo Trading Desk Today

    Learning in the algorithmic world never stops!!

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  • ketan parekh scam 2001

    Deepak Sharma 13 Mar 2021

    All you should know about Ketan Parekh - The Infamous Stock Market Fraud!

     

    Banned from trading for 15 years till 2017, Ketan Parekh continued working from the shadows. Let’s know the man who's heard more than he's seen.

    On one hand, we have big names of successful traders in the stock market like Warren Buffet, Carl Icahn, George Soros, etc. who became millionaires by investing in the stock markets. And on the other hand, we have scamsters like Harshad Mehta and Ketan Parekh, who not only ruled the stock market but also were found guilty of economic crimes.

     

    The gigantic Ketan Parekh scam, unearthed in March 2001, swallowed the top institutions including the Unit Trust of India (UTI), the Bank of India (BoI), the Madhavpura Mercantile Cooperative Bank (MMCB). This was the second most important scam after the Harshad Mehta scam, which shocked the Bombay Stock Exchange.

    The SFIO (Serious Fraud Investigation Office) has estimated that the extent of the fraud could touch Rs. 30,000-40,000 crores. The investigations indicate that he managed the scam by synchronized trading & circular trading, effecting cross deals, generating high volumes and prices by acting in concert with other brokerage firms across the stock exchanges.

    Charges against Parekh to be framed include manipulation of shares with the intent of benefiting himself and others, falsifying accounts, cheating banks, giving loans without following norms, paying huge commissions to some company directors, and mishandling public money.

     

    Who is Ketan Parekh?

     

    Ketan Parekh, a former stockbroker from Mumbai, acknowledged as 'Bombay Bull’ and the ‘Pied Piper of Dalal Street’.

     

                                                                             

    Ketan Parekh was a CA (chartered accountant) by profession. For him, the stock market was a family business, which was passed to him by his father. All this conditioned him to get familiarized with a trade circle of his own and this way gradually, he became the big bull of the stock market. Harshad Mehta himself mentored him and walked him through the nooks and corners of the stock exchange.

     

    He was a soft-spoken, unpretentious guy that you would mistake for being an ordinary person on the street. However, in reality, his associates describe him as being shrewd and ruthless.

     

    Ketan Parekh was like the God for many investors as he created a deception that whatever he wished the market seemed to grant him and whatever he touched turned into Gold. His portfolio comprised of 10 preferred stocks, which can be best described as the K-10 stocks and the market always forecasted these stocks as bullish. 

    On top of all this, he also had good connections with international celebrities like Kerry Packer and others. They together started a venture capital firm, KPV venture with $250 million and funded some more start-ups in India. 

     

                                                                               Ketan Parekh – Biography of the Man Behind the Ketan Parekh Scam – WikiBio

     

    How Ketan Parekh Scam was executed?

     

    Ketan Parekh always believed and invested in the ICE sector Information, Communication, and Entertainment and that was the time during 1999 and 2000 when the dotcom boom had just started. During this time, he ruled the stock market.

     

    He traded in the Kolkata stock exchange which proved to be beneficial for him due to the lack of regulations. Many investment firms, banks, overseas corporations, businessmen from listed companies invested their money to be managed by him.

     

    The Ketan Parekh scam case mainly involved two key strategies, namely circular trading and pump and dump scheme.

     

    Pump and dump Scheme

     

    Here, he would purchase 20-30% of the share of a company to cause a price rise. The price increase will subsequently tempt other investors to invest. Once the prices shoot up, he would simply dump the shares and exit by liquidating his holdings. 

     

     

    Circular trading 

     

    In this strategy, KP made a few amateur traders buy and sell frequently certain shares throughout the day on his call. As a result, the "traded volumes" went up drastically. The investors who based their decisions on the volume traded, considered such stocks to be good for investment. 

    Once the price rises, KP made a profit out of it and also paid the traders a small remuneration amount. This type of trading is popularly known as the Badla system. 

    However, trading at such magnitude, demands a huge amount of money.

     

    Circular Trading in Stock Market - Sana Securities Blog

     

    Playing with a pack of 10 stocks

    Ketan Parekh – Biography of the Man Behind the Ketan Parekh Scam – WikiBio

    Factors That Helped Ketan Parekh

     

    A small Ahmedabad-based bank, Madhavapura Mercantile Cooperative Bank (MMCB) was Ketan’s main partner in the scam. KP and his associate started knocking the MMCB for funds in early 2000. 

    In December 2000, when KP faced liquidity problem in the settlement he used MMCB in two different ways-

    • First was the pay order route, where KP issued cheques drawn on BoI to MMCB, again which MMCB issued pay orders, the pay order discounted at BoI. 

     

    • The second route was borrowing from the MMCB branch at Mandvi (Mumbai) where several companies owned by Ketan and his associates had accounts. Ketan used 16 accounts, either directly or through other broker firms, to collect funds. 

    Funding Mechanism  

    • Simple borrowing mechanism 

    • Badla System-Primitive carry forward system fabricated on the Bombay Stock Exchange

    • Badla trading involved buying stocks with borrowed money. The stock exchange acts as a mediator, and the interest rate is determined on the demand for the underlying stock maturity (less than 70 days).

     

    How Whatever Ketan Parekh Touched Turned into Gold?

     

    The ICE sector was booming and KP invested largely in these sectors which backed him to gain the trust of the investors. The funding method of buying shares and getting pay orders and later getting them guaranteed when the prices rise, also helped him create a Bull Run in the stock market.

    Many investors believed that the negligent reactions and regulations of SEBI who could have noticed the abnormal price movements in the market helped the scam to accumulate more losses to them. His connections with big celebrities, political and religious leaders also aided him to get the majority of the fund from large corporate and businessmen.

     

     

    How was it detected? 

     

    Sucheta Dalal played a crucial role in exposing the Ketan Parekh scam as well, just like the Harshad Mehta scam.

    Due to MMCB’s actions, their depositors underwent huge losses. After being declared defaulter, they had not refunded the money of a majority of depositors. Ketan Parekh made a network of 20-25 companies for this manipulation of stocks.

    When Dot-com-Bubble started bursting, that time the entire world was noticing a slowdown in Technology stocks. In March 2001, some brokers and traders started selling K-10 stocks that were overvalued because of the shooting prices.

    Parekh failed to challenge the market for long. When the prices of the stocks started coming down, he faced difficulties in raising funds from the banks. Then Parekh's Pay order matter came to light, and the scam was exposed.

    Highlights:

    • The Stock market crash of 2000 

    • KP started borrowing heavily 

    • Attempted to set up the price rise and later sell

    • But failed to do so

    IT department detected errors in sources of funds of KP 

    • Routine market surveillance of 5 stocks

     

    Actions and Regulations - by SEBI

     

    RBI and SEBI were quick in detecting that there was something abnormal about the profits KP made and the loan he had received. Soon, he was arrested in March 2000 and was held in custody for more than 53 days. 

    He was prohibited from trading in the stock market till 2017 and was also sentenced to 1 year in jail. It became one of the biggest stock market fraud in stock market history.

    SEBI banned the Badla system and circular trading. SEBI also started inspecting all the accounts related to the stock exchange annually. They permitted collateralized loans only via BSE and NSE. 

    Though he was banned by SEBI, it was rumored that Ketan Parekh operated through puppets who executed his orders in the stock exchange. In 2008 many companies were questioned by SEBI and were barred from helping him.

     

    Another Scam by Ketan Parekh

    Do you know, Ketan Parekh’s name was also involved in the 1992 Cantina Mutual Fund, and was sentenced to a year of jail. During this scam, Parekh had sent around 2000-3000 crore rupees overseas with the help of the Overseas Corporate body. 

    Not only in Swiss Banks, but he also used to send money to different banks all around the world. CBI had seized his Swiss Banks accounts also. He still has got a lot of cases against him in court.

     

    Closing Thoughts

    This is how the Biggest Stock Market frauds in India came to light and rocked the entire nation. People choose short-cuts in life to gain fame and money easily. If you dream to become a successful Investor or Stock Market broker then we suggest you pick the right path. Remember, there is no ladder to success; you'll have to follow each step with Hard-work and dedication.

     

    John Andreas Widtsoe Quote: “Fraud and deceit are anxious for your money.  Be informed and prudent.” (7 wallpapers) - Quotefancy

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  • WHY ARE STOCK MARKET TRAINING COURSES IMPORTANT BEFORE YOU START INVESTING?

    Deepak Sharma 3 Mar 2021

    WHY ARE STOCK MARKET TRAINING COURSES IMPORTANT BEFORE YOU START INVESTING?

     

    “An Educated Trader is Never Greedy or Fearful of the Market…

    Rather They Embrace the Opportunities When They Present Themselves.”

    Just because you’re starting in the game doesn’t mean you, compulsorily, have to settle for less return than the top market players. Learn the secrets of professional trading from our NIWS stock market experts, and make profits investing today! 

    No matter how much experience you have with the financial markets, you can trust us to teach you the fundamentals of technical analysis, and get you started on the right track!

    Whether you are a beginner, a regular investor or an experienced market player, I know many people who even after working in the Industry for whole life could not determine the correct ways to invest. We provide a varied range of courses so that you become a better trader, every single day! Learn how to trade like a professional investor from a former stock broker!

    Stock Lovers, Traders, Investors, Stock Market Aficionados!

    Do you want to learn?

    • How to trade and invest in the stock market successfully? 

    • How to read trading charts correctly?

    • How to reduce losses and manage overall portfolio risk?

    • How to protect your investment when price moves against your predictions? 

    • How to make Maximum Profit at Minimum Risk?

    • And How to trade stocks like pros?

     

    Good news! We got the courses for you.

    NIWS STOCK MARKET COURSES 

    Our courses range from Global Program in Financial Market Management to Artificial Intelligence Automated Trading, Research Analyst to Smart Investment and Trading Professional. We are committed to providing quality education and help students dominate financial areas in India as well as Abroad. 

    We offer concise Career Oriented Courses in Share Market, compact Stock Market sessions, comprehensive Capital Market review, in-depth Commodity market analysis, exclusive Forex Market insight, thorough Derivative, and options experience (NIFTY CALL PUT) and elongated Financial Market familiarity. 

    NIWS also advises certification courses for practical Professional and Theoretical Analysis, Indicators such as NSE, plus BSE, from NCFM until NISM, from BCSM into MCX, furthermore from NCDEX through MCXSX Modules training and certification including Risk Management.

    OUR FLAGSHIP PROGRAMS:

    • CFA, CFP

    • Financial modelling

    • Equity research

    • Research analyst

    • Advance Level Smart Investment and Trading Professional

    • BSE, NSE, SEBI, NCDEX and MCX certification courses

    • Modules of NCFM and NISM

    • Certification in Risk management

    • Certification in technical Analyst

    • Diploma courses in stock market

    • Diploma in Research analyst

    • 6 Month Program in Financial Market Management

    • Global Program in Financial Market Management Artificial Intelligence Automated Algorithm Trading

    • Faculty Development Program in Financial Market Management

    Enrol in NIWS stock market courses now and start trading the market successfully!

    Image result for stock trading institute training classroom usa

     

    Who can take this course?

     

    • Anyone who wants to get into stock trading

    • Anyone who wants to get into forex trading

    • Anyone who wants to learn how to read trading charts

    • Anyone who want to refresh their trading knowledge

    • Anyone who wants to understand how the financial markets work

    • Anyone who wants to make a career in stock market sector

    • Anyone interested in investing

    Take this course to take your investing game to the next level!

    Requirements

    • No previous experience or software needed! 

    • Pen and paper for taking notes

    • Internet Connection

    • PC or Laptop

    • An open mind!  & Willingness to Learn

    WHY CHOOSE NIWS?

     

    NIWS is one of the leading institutions in the field of Financial Markets who are providing a very polished E-Learning Platform which enables the student to complete the course on the go and Classroom-based practice with specifically crafted Test Platforms. 

    Our mission is to help and create a financial fraternity by providing World class education and guidance in fields of Finance. To heighten the flow of knowledge through carefully designed quality educational memoranda by taking it to another level and making it convenient to all. 

    Our faculty consists of a group of brilliant minds, who have a wide array of experience under their belts. From Financial Market Management to Crash analysis, from Strategies to Certifications and topics be it Blue Chip Stocks, to IPOs, From Margins to Market Crashes, From Rallies to a variety of sectors, domains such as IT, Gas and Oil, telecommunications, Micro and Macro Economics etc., we have a nucleus of experienced mentors and tutors.

    Our recipe for Success:

    Experienced Veteran Teachers + Exceptional learning setting + Categorized variety of courses = Extraordinary Results

     

    Image result for stock market classrooms

    Our Team of Experts

    Get your answers from our Certified & experienced Market experts to every single question you have related to the learning you do in these courses!

    Mr.Umesh Sharma

    Head of business development, marketing operations and wealth management 

    MBA having 15 years of experience Banking and Financial markets with expertise in marketing, administration, sales and training. He always innovates new ideas with positive attitude and long term vision which makes him a key asset to the team NIWS. He is of firm belief that one can achieve the goals by ethics, integrity and passion.

    Mr.Deepak Sharma

    Head Faculty/Consultant 

    Masters in Economics with Certificate in Performance Measurement and Risk Analytics and Structured Derivatives Product. Having more than 15 years of experience in International and Domestic BFSI segment with experience in Dealing, Investment, Training, Wealth Management, Performance Measurement and Risk Analytics of Sovereign and Pension funds. 

    Mr.Rajan Tiwari

    Faculty/Trainer NISM/NCFM - Certification and Investment Advisory

    LLB Graduate with Certificate in Algorithm Trading, Import Export Management and Diploma in Financial Market Management having more than 5 years of experience in Algorithm Dealing/Investment Advisory, Wealth Management and Training. 

    Mr.Ajay Gaur

    Consultant and a key faculty member for Fundamental Valuations and Financial Modelling 

    Chartered Accountant with over 9 years of experience in Tax, Audit, Consulting to Corporates, Investment and Tax planning to corporates and Individuals. His experience and expertise at NIWS makes him a valuable asset for the growth of organisation.

    Abhay Mehrotra

    Entrepreneurial Trader & Technical Analyst with 15 Years of experience trading with in financial markets

    Area of Expertise Includes Neo wave /Elliot Wave Analysis , Wolfe Wave , Harmonic Patterns, Classical Chart Patterns, Gann Time & Price Analysis ,Time Triangulation analysis , Andrew Pitch Fork , Swing Trading, Positional Trading, Risk Management, Forecasting /Market Trend Analysis .Technically savvy ,proficient in real time charting software and a variety of trading platforms.

     

    Reviews

    Let’s look at some of the reviews posted by our students on social media platforms – 

    Now, don’t wait any further, just go ahead and enrol yourself with NIWS and let the magic of the stock market unfold for you, yes you! 

    Check NIWS website for more details.

     Start with a demonstration class

    banking

     

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  • Become a NIWS franchise, Own a stock market institute now and work with the leaders of the domain.

    Deepak Sharma 19 Feb 2021

    Things You Should Know- Before You Buy a Franchise in the Stock Market or Financial Market


     

    Franchising - A Realistic Option for Every Business

     

    Financial services make the economy of the country stronger and encourage development of all sectors.  In the present scenario, the best financial franchise businesses in India offer customized investment solutions to investors, secure ways to transfer money, a full-service brokerage, cloud-based business solutions and many more benefits. 

     

     

    Choosing the best franchise business of the stock market, one gets a robust business model, a product in demand and assistance of a franchisor; which makes the process of making profit way easier. 

     

    Stock Market Franchise business can help you earn a lot of money but at the same time it is very important to understand the market and the company from where you are going to take the franchise. But like any other business it is not easy to earn money without putting much effort.

    Once you have taken the stock market franchise, it would be your duty to help your customers up to their expectation in order to maintain your client base. This is very important to retain your customers for the long term in order to get the business throughout the year consistently.

     

    https://www.pointfranchise.co.uk/images/zoom/articles/franchise-definition-article.jpg

     

    What is Franchising?

    Franchising is a term that defines the business relationship between two organizations where a franchisor, who is the owner of a brand name, product, or system of a business, permits a franchisee to use its brand, product, or business process for a fee. 

    At a conceptual level franchising is a method of marketing and distribution, and organizations use franchising as a method of growth and development.

    Franchising is a low-capital rapid growth market share gaining option. The goal of a franchisor is to provide a consistent product and consumer experience 'indirectly' through a franchisee.

    Benefits of Franchising

    • The risk of business failure is reduced by franchising, as your business is based on a proven idea. Hence, you have an advantage to check how successful other franchises are before committing yourself.

    • You are using a recognised and established brand name and trade mark. You have less trouble in comparison to your own business, as you can now enjoy additional benefits of marketing like advertising and promotions, which is done by franchisor.

    • Products and services will have already established a market share. Hence, there will be no need for market testing.

    • All kinds of support are provided by franchisor - usually as a complete package including training, help setting up the business, a manual telling you how to run the business and so on.

    • No prior experience is that much required, as the training received from the franchisor ensures the franchisee establishes the skills required to operate the franchise.

    • You usually have exclusive rights in your territory. The franchisor won't sell any other franchises in the same territory.

    • Financing the business may be easier. Banks are more likely to lend money to buy a franchise with a good reputation.

    • Established Relationships with suppliers

    • You can benefit from communicating and sharing ideas with, and receiving support from, other franchisees in the network.

     

    Career opportunity - In Stock Market / Financial Market

     

    Banking and financial sector is a wide sector and we can see it growing rapidly and the financial market sector which includes the broking industry, stock market, research house and investment banking sector are on the tremendous growth. As per BFSI Sector Skill Council of India (BFSI-Banking, Financial Services and Insurance), this sector will provide more than 8 million jobs by 2025.

    Stock market is nowadays becoming a trend that involves a lot of people in it whether they are interested or not but most of them are part because of seeing many other involvement of the individuals around them.

    If you are sure to make money and have that spirit to be in the market, and to hold a significant position, then it will demand time and money at the start, but once you have cleared the examination and hold the certifications then you are capable of getting a quite great position in the market.

     

    See the source image

    A franchisee must follow the below key points in order to become a successful franchisee. Let us discuss all the points in detail so that you don’t regret in future after buying a franchise.

    • Do a Good Research about the Company 

    It is utmost important to know about the company’s history in the current decade, about its performance, management, experience, stability and hot downfall during the recession.

    Also, don’t forget to go through franchise disclosure documents, provided by the franchisor, so that you can have a better understanding about the company’s history and other details. You must check about the litigation and bankruptcy details as well.

    • Analyse the Current and Future Market

     

    When you take a franchise in a particular segment of the stock market, be sure if there is an immense growth in that segment. This will help you grow faster and make more clients for franchise business growth.

     

     

    • Select Best Location Of Your Territory

     

     

    You should select a prime location for your franchise office, so that there could be a huge possibility of clients visiting your office without any hassle. Also, it should be far from another competitor of the same segment, as that will hamper your business.

     

     

    • Sign the Franchise agreement when all the clauses are clear to you

     

     

    The franchise agreement should be readable and understandable, without any kind of hidden clause. Every point disclosed between the two parties before opening the outlet should be mentioned on the agreement paper. 

    • Business Development Support   

     

    As for any stock trading company, time is the most important factor and any kind of delay can make your customers go insane if they lose money, hence you should make sure that the company’s managers and the employees are dynamic in providing all kinds of necessary support and customer service without much delay.

    Also, the managers must support their franchisees from time to time and give those proper tips and tricks for better marketing, promotion and lead generation.

     

    • Technical Support

     

    Make sure that the company’s relationship manager is good enough to train your employees properly, provide back office support and technical support. 

    The broking house must be very much efficient in research and development.

    They must train you well about the company’s software, trading platform, business ethics and tactics and all other related processes.

     

    • Achieve Target

    Many Stock Broking houses will give you a big target to achieve during the first year of your business to check if you have potential or not. If you fail to achieve the same, they might ask you to exit from that franchise business.

    Many beginners fail to fulfil such expectations and targets, so make sure that the broking firm that you are willing to join should not have such kind of target achieving system.

     

    • Revenue Sharing Model

     

    First of all, make sure that the total investment for opening a franchise outlet is under your budget. 

    Secondly, the majority of the progress revenue should come in your pocket.

    In general, stock market broking houses provide 70% of the generated revenue to the franchise. Lesser than this, may not be profitable. 

     

    Nowadays, people prefer to open a franchise outlet or office, only when they start generating good brokerage revenue.

     

    • Exit Strategy

     

    You should always plan an exit strategy when you start running the business. 

     

    Such situations may occur, when you are not doing good in your business, or suddenly your employees fall sick or leave your business, or there is a huge turbulence in the stock market, or in case of any bankruptcy.

     

    “NIWS” National Institute of Wall Street, is one of the top institutes in its domain with a wide list of courses, ranging from Banking, Finance, Stock Market, Portfolio and Wealth Management to Technical and Fundamental analysis. With over 10-15 years experienced professionals in domestic and international markets, we strive to help students to achieve their lifelong career goals and aspirations.

    NIWS – A World Class Finance Education Provider

     

    NIWS'' National Institute of Wall Street, is one of the top institutes in its domain with a wide list of courses ranging from Banking, Finance, Stock Market, Mutual Funds, Insurance, Portfolio and Wealth Management to Technical and Fundamental analysis. The NIWS team have over 15-20 years of experience professionals from BFSI segment in domestic and international markets

     

    At NIWS we have always believed in the power of financial education to transform lives. Our courses include instruction from experienced professional traders, hands-on trading using state-of-the-art equipment and tools, and a framework for building a customized trading plan.

    NIWS ensures that the students are equipped with both theoretical and practical knowledge that makes them self-motivated, dynamic, broad and with a positive mind-set so as to be job ready from the very first day.

    NIWS assists all successful candidates in getting better placement opportunities. We provide you a short term job oriented course.

    • Share market

    • Stock market

    • Capital market

    • Forex market

    • Derivative (nifty call put)

    • Commodity market

    • Financial market

    NIWS offers the students job guarantee and assistance after completion of the courses given the fact that we know the skills and competencies required in BFSI education with practical knowledge, professional qualification which is the key to survive in today’s world. Being a NIWS-IAN means going much beyond for a professional life.

    Furthermore, we also offer certification courses for- Technical and fundamental analysis, NSE BSE NCFM SEBI certification modules and preparation.

     

    BUSINESS PARTNERS/FRANCHISEE – JOIN WITH NIWS FAMILY

     

    NIWS is expanding its wings and has recently started appointing Business Partners in a Franchisee based model Pan-India. It is an ideal and unique opportunity for individuals/corporates to be a part of the BFSI education vertical by getting associated with NIWS.

    The Individual/corporates can contact NIWS by filling the franchisee registration form and can have a discussion about the business model and opportunities by getting associated with us. 

    Investment to start a franchisee: RS 3 lakh (non-refundable)

    Area required for the centre: 800 to 1500 square feet

    We provide - 

    • Support during initial phase before opening the Centre

    • Training, Content Development, Academic Research and Quality Control

    • Marketing Guidance and Support

    NIWS Advantage:

    • Experienced Faculty 

    • Practical Approach

    • Best Support

    • International Stock Market Trading

    • Infrastructure

    NIWS core team would help the franchisee in recruitment and training to staff, counsellors and faculty (trained through our Faculty Development Program).

    NIWS core team will conduct brand awareness, promotions and marketing campaigns through SMS/ emails/ social media to all BFSI related businesses/ educational Institute about the opening of new branches in your city and state. We will conduct Seminars on a regular basis about the courses we offer and growth opportunities for students, investors and traders in the BFSI segment.

     

     The Bottom Line

     

    Stockbroking business has witnessed lots of customers coming for the first time to the capital market this year. The highest numbers of Demat accounts were opened at the beginning of the year 2020. It was a huge growth in account opening from pre-lockdown levels (approximately 100%).

    Hence it is the best time to invest in stock broking franchise business and financial market education business. You just need to follow all the above mentioned points before finalizing and buying the franchise, so that you make the best decision for your business and grow faster. All the Best!!

     

    As you work hard to make the most of your franchise, you will find yourself growing and improving in more ways than one. Owning a franchise can be an extremely rewarding opportunity if you let it.

     

    Buy companies with strong histories of profitability and with a dominant business franchise. - Warren Buffett

     

     


     

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  • 7 BLUNDERS THAT INVESTORS MAKE IN STOCK MARKET

    Deepak Sharma 9 Jan 2021

    3 Skills to Make Investing for Beginners Child's Play


    7 BLUNDERS THAT INVESTORS MAKE IN STOCK MARKET 

     

    Nobody's perfect. We are all going to have our days of wins and losses. 

    Investing in the stock market can be a tricky game, and if you’re not careful, you might end up making some mistakes that could cost you a lot of money.

    From outside, investing in the stock market may seem like a stress-free side hustle. First-time investors are too eager to jump right into the investment game, and often not commit to learning from the mistakes of others. 

    However, first-time investors often find that the truth is far from this myth and jump into the market without proper strategy. Investing takes time, effort and a lot of patience. In fact, in some cases, the investor may continue to make the exact same mistakes over a period of time, when they do not learn from their previous errors.

    It pays to remember that the assets linked to the financial markets may shift in value. So, your best bet is to make the most of these investments is to perform careful research with fact and figures and make informed decisions based on facts as opposed to instinct or emotions.

    To be a stock market investor, it is utmost important for a person to be level-headed and logical. They should know how to juggle between their rational thoughts as well as gut instincts. Only a level headed investor can think and make wise decisions on the go. 

    The good news is that most of these mistakes can be avoided by careful analysis and awareness. We will take a look at the ‘7 Biggest Blunders’ that investors make in the stock market.

          

    1.Investing like Gambling

     

    Casino Gambling vs Investments - Wall-Street.com 

      


    An old Japanese proverb says that, "you will eventually lose every rupee with which you gamble." 


    You should never put yourself into the high-pressure situation where you are gambling money on the line which you need for other reasons. When you invest with money that you can afford to risk, you will make much more relaxed unbiased trading decisions.

    Any sum left over after the discretionary expenses of the investor and savings is what is to be used in investment. Eventually, you will have much more success with your trades, which will neither be driven by negative emotions nor fear.

     

    2.Lack of Planning

     

    Planning and strategizing helps the investor to decide and select in what type of securities he must invest in, how long he should invest and how much he should invest in order to get the expected return that he desires.

    The downside to not having a proper plan in place is that you have no end goal and you are aimless, as a result, your investment pattern can be quite arbitrary. This may result in greater losses if you’re not careful.

     

    3.Buying Stocks that Appear Cheap

     

    This is a very common mistake, and those who commit it do so by comparing the current share price with the 52 week high of the stock value. 

    Your lookout should be to invest in companies which will experience sustained growth in the future. Only considering the fact that a company's share price came about to 30% higher last year will not help it earn more money this year. 

    Avoid buying stocks that simply look like a bargain. It is important always to have a critical eye and be picky while choosing such stocks, since a low share price might be a false buy signal. 

    Do your homework and analyse a stock's viewpoint or direction before you invest in it. In many instances, there is a strong fundamental aspect for a price decline.

     

    4.Getting Greedy 

     

    Investors who get greedy have a tendency to get “slaughtered.”


     

    There’s an old saying on Wall Street that goes like this:

    “Bulls make money, bears make money, and pigs/amateurs get slaughtered.”


    It means that both bullish and bearish investors/traders will make money in markets over time, but greedy investors (“pigs”) will lose money.

    In the name of diversification, once the shares starts performing well some investors put all their eggs in one single basket. They have very less amount invested in other securities. This may cause some serious problem if the investor is wrong. Therefore, it is not good to be greedy.

     

    5.Holding Losers for Too Long & Selling Winners Too Soon

     


    Every time you trade you should ask yourself, “Is this the best possible stock I can allocate my money to?”

     The best possible decision from above fact should drive most of your buy/sell/hold decisions. 


    Some investors have a tendency to sell their winning stocks too quickly so they can confirm with profit and hold their losing stocks for too long so that they can avoid a loss.

    One common example of this blunder, is an investor who would rather hold onto a losing stock until it gains +20% back to where he bought it than take the loss and allot the money to a stock that gains +30% over the same time period. 

    Of course, investors don’t analyse more on this situation, but clearly, we can see now that, the 30% gain is much better, if you visualize properly instead of avoiding the pain of “locking in a loss.”

     

    6.When Buying a Stock, Overlooking the "Big Picture"

     

    For a long-term investor one of the most important - but often overlooked - things to do is qualitative analysis, or "to look at the big picture." An investor can earn more profit in the long term rather than a short timeframe.

    Assessing a company from an approximate standpoint is as important as looking at the sales and earnings. Also, ensure that you have at least some investments in your portfolio that you plan to hold for 5 to 10 years, at the very least. This could maximize your returns greatly.

     

    Write out your short-term goals and long-term goals, and design a perfect plan for your future. Pick an investment strategy that includes signals and guides for the long run.

     

    7 .Taking Stock Tips from Financial Media

     

    It’s good to stay up-to-date on the markets, economy, and your investments. Just don’t pay too much attention to the daily excitement of the “talking heads” on TV.


    Financial media is often designed to stir up the adrenaline and emotional parts of your brain to invest in impulse decisions rather than help you make better investing decisions.


    Buying on tips from the media is a speculative gamble and makes an investor greedy. If one really catches your attention, the first thing to do is consider the source. Stick to your basics and do your own homework so that you know what you are buying and why you are taking positions.

    Next time you're tempted to buy based on a hot news from media, wait/don't do so until you've got all the facts and figures and are comfortable with the company and risk. If possible, take unbiased opinion from informed investor

    The Bottom Line

    As a child, you didn’t learn to ride your bike without taking a few falls. You didn’t learn a bicycle without falling at least a few dozen times. One can become professional only by learning from his mistakes. Practice and take a next step with careful strategy and money management. 

    If you are looking to make a jumbo win by betting and risking your money on your gut feelings, try the casino.

    Every investor makes mistakes. Everyone has to learn at some point. What matters most is that you must be ready and eager to learn new things and always improve how you invest. Most successful traders are constantly studying their techniques, looking for an additional edge that may help them make more-informed decisions.

    Take pride in your investment decisions and in the long run, your portfolio will grow to reflect the integrity of your actions.

    If you have the money to invest and you are able to avoid these blunders, you could make your investments pay off; and getting a handsome return on your investments could take you closer to your financial goals.

    Please understand that mistakes are part of the process and learning to reduce them could help you develop a more disciplined consistent approach to trading.

    Armed with all the above mentioned knowledge and guidelines, you’re now all set to begin investing. All the best  !!

     

    John C. Bogle Quotes (56 wallpapers) - Quotefancy

     

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  • How Stock Market Indices and Circuit Breakers Work in Stock Market ?

    Umesh Sharma 4 Dec 2020

     

    What are the stock market indices?

    Market indices bring together a select group of company stocks and regularly measures them to show the performance of the overall market or a certain segment of the market.

    There are thousands of companies listed on stock markets, making it almost impossible to monitor each company. This is why stock market indices are created.

    In short, an index helps investors understand the health of the stock market, enables them to study the market sentiment, and makes it easy to compare the performance of an individual stock.

     

     

    Sensex and Nifty are the two most important stock market Indices in India. They are the benchmark indices meaning, the important ones, and a standard point of reference for the entire stock market of India.

    For example, the BSE Sensex is an index consisting of 30 stocks. Similarly, the BSE 500 is an index consisting of 500 stocks.

    KEY TAKEAWAYS

    • The Sensex refers to India's benchmark stock index, which was created in 1986 and represents 30 of the largest and most well-capitalized stocks on the BSE.
    • The Sensex has been on a growth curve since India opened up its economy in 1991. Most of its growth has occurred in the 21st century.

    Types of Stock Market Indices

    What are the Benchmark Indices?

    S&P BSE Sensex, a collection of 30 best-performing stocks, and Nifty 50, a collection of 50 best-performing stocks are indicators of BSE and NSE respectively. They are considered benchmark indices because they are the most concise, use the best practices to regulate the companies they pick, and hence are the best points of reference for how the markets are doing in general.

    NIFTY INDICES

    NSE Indices Limited (formerly known as India Index Services & Products Limited), or NSE Indices, owns and manages a portfolio of 67 indices under the NIFTY brand as of September 30, 2016, including NIFTY 50. NIFTY indices are used as benchmarks for products traded on NSE.

    NIFTY indices served as the benchmark index for 38 ETFs listed in India and 12 ETFs listed abroad as of September 30, 2016. Derivatives benchmarked to NIFTY indices were also available for trading on four international stock exchanges as of November 30, 2016 (The Singapore Exchange, the Chicago Mercantile Exchange, the Taiwan Futures Exchange and the Osaka Securities Exchange).

    S&P BSE SENSEX INDEX

    Sensex, otherwise known as the S&P BSE Sensex index, is the benchmark index of India's BSE, formerly known as the Bombay Stock Exchange.) The Sensex is comprised of 30 of the largest and most actively-traded stocks on the BSE, providing a gauge of India's economy.

    Created in 1986, the Sensex is the oldest stock index in India. The index's composition is reviewed in June and December each year. Analysts and investors use it to observe the cycles of India's economy and the development and decline of particular industries.

    Fun Fact :  BSE adds S&P as a prefix before all the indices because, in the year 2013, BSE and S&P Down Jones Indices, a global resource for all index related information announced a strategic partnership “to calculate, disseminate, and license the widely followed suite of BSE indices,” BSE had said in a statement. It is just a co-branding technique.

     

    Conclusion

    What are Stock Market Indices By Kotak Securities®

     

    MARKET-CAP BASED INDICES

    Market cap is the market value of any public traded company. There are few indices that purely select companies only on the basis of market capitalization.

    Indices like NSE small cap 50 and S&P BSE small-cap are indices that are a collection of only those companies that have a lower/smaller market capitalization in accordance with rules by SEBI. There are also other indices like NSE midcap 100, S&P BSE midcap, and likewise.

    SECTORAL INDICES

    NSE and BSE also have some indicators that are a gauge of companies falling under one particular sector. Indices like NSE Pharma and S&P BSE Healthcare are indicators of their respective exchanges for the pharmaceutical sector.

    It is not necessary that both the exchanges will have corresponding indices for all the sectors but this is generally the case.

    Another example could be Nifty PSU Bank and S&P BSE PSU Indices are indicators of all the listed public sector banks.

    OTHER INDICES

    There are also some other indices like S&P BSE 100, S&P BSE 500, NSE 100 among others which are slightly bigger indices and have a much bigger number of stocks listed on them.

    How Do Indices Select Stocks?

    Till now we understood, what are stock market indices and their examples but do we know how a stock market index in India selects stocks.

    How do indices arrive at a value

    When an entire index, for e.g. like a Sensex or a Nifty goes up or down, it means that stocks comprising those indices have performed better or worse. This does not mean that if a company, say Reliance Industries Ltd. (RIL) which is listed in both, Nifty and Sensex, goes up by say 5% during a trading session, the index will not correspondingly go up by 5% because there are other stocks in the index as well which may have gone up or down and influenced the movement of the index.

    How will the weights be assigned depends on the stock selection strategy put in place? On any given day, not all sectors in the economy are doing well. An index’s total value cannot be a simple addition of all m-cap values because not all stocks carry the same weightage in the index

    There are primarily two factors by which stocks are picked:

    1. Market-capitalization:

    Companies with the largest market-cap are picked and grouped together in an index when the M-cap is the premise of the stock selection strategy.

    Companies with the largest m-cap have a bigger weightage on the index’s value while stocks with a small m-cap do not influence the index as much. Indian indices mostly use free-float market capitalization for assigning weights to their stocks.

    1. Price:

    There are also some indices in the world that use price to give weightage to stocks in an index.

    An example of this would be Japan’s Nikkei 225. Companies with a higher stock price have a higher weightage and impact the index more than the lower valued stocks.

    Note:

    Difference Between Free Float M-Cap From Full M-Cap

    M-cap is the total value of the company measured in the outstanding shares it has issued. Free float m-cap, which the indices use to weigh stocks, excludes shares held by promoters.

    For example, Reliance Industries Ltd. (RIL) has the highest free float m-cap as on April 20 closing data so it has the highest weightage among other stocks that form Sensex. So a movement in RIL, positive or negative, will have a higher impact than a positive or negative movement in other stocks.

    Why Do We Need Indices?

    The basic premise of having indices is to make trading easy for investors.

    Imagine a stock market where you do not have such categories, where all the stocks listed on the exchanges are available for purchase, you do not know which stock has a higher m-cap, or lower value and which are the ‘better’ stocks. This is where the importance of stock market indices is realized.

    They make it easy for you to trade by grouping them and making their visibility stronger.

    Need for Stock Market Indices By Kotak Securities®

     

    Here are a few reasons why having indices is an essential component of stock market investments:

    GROUPING / SORTING

    Let’s consider Sensex as an example. S&P BSE Sensex is a collection of 30 stocks, S&P BSE 100 is a collection of 100 stocks and S&P BSE 500 is a collection of 500 stocks. These indices help you to see the top stocks by way of m-cap in one place.

    For example, in current times where a pandemic has gripped the entire world and stock markets are down, you may be curious about how the health sector is doing. In the absence of indices, you would have to individually hunt for all pharmaceutical companies, collate them together and do your own math.

    However, grouped indices like Nifty Pharma and S&P BSE Healthcare do that job for you.

    ASSESSING STOCK AND MARKET PERFORMANCE

    Indices have a plethora of information on stocks. Price history, volume changes, peer to peer comparison, sector performance, volatility, and a sense of where the market is moving. If a collection of the 30 or 50 best companies is showing an uptrend or a downtrend it speaks volumes on how the stock market is doing in general.

    REFLECTS INVESTOR SENTIMENT

    If we refer to the table above, we can see that in the calendar year 2020, Nifty 50 has dropped 26.59% and Sensex by 26.07% in the last 4.5 months. This speaks a lot about investor sentiment.

    Coronavirus has shaken investor confidence and global economies. With job loss, industry shutdowns and the lockdown imposed, people have lower confidence in the markets and do not consider them as safe havens anymore. Currently, the market is indicating a negative investor sentiment.

    Index

    YTD performance (year to date) *

    Nifty 50

    -26.59%

    S&P BSE Sensex

    -26.07%

    *As on April 20 closing session

    How Is Index Value Calculated?

    An index’s value depends on whether it is a price-weighted index or a market cap-weighted.

    Below is an example of the BSE Sensex to understand how an index is calculated.

    How is Index Value Calculated By Kotak Securities®

     

    Conclusion

    Stock market indices are the bread and butter of the investment milieu. It is not just an added advantage but a necessity.

    Having indices reduces your load and makes at least the first step in stock market investment easy. This is not the end. You do need to do the rest of the work for yourself when it comes to investing.

    Investment portfolios cannot be one-size-fits-all and need to be tailor-made for every investor.