What Is Trading - Earn Regular Income From Trading

Hello friends, we often hear about trading Like (Equity Market, Commodity Market, Forex Trading) in the stock market, many people earn millions by investing in trading. But thousands of people also have loss. What is trading? There is a difference between trading and investment, what are the types of trading and regular income can be earned from trading. Today I will explain all these with details. 

What Is Trading
Trading

What Is Trading?

Friends, Trading is called business in Hindi, which means buying something and selling it at increased prices. So that we can increase the profit on our investment more. Similarly, buying shares in the stock market and as soon as the price of the shares increases, To earn profit by selling it, we call Trading in the stock market. Now a lot of people think that they do the same in investment. What is the difference between trading and investment?

  • In investment, we hold shares for a long time like 1 YR, 5 YR, 10 YR. (In trading we hold shares for a very short period of time such as - 1 Minutes, 1 Hour, 1 Months)
  • In investment, we buy the shares of the good company because we hold the shares of the company for a long time in the investment. (In trading, we do not know about any details of companies and buy only by looking at the price of their shares. Because in trading we mean by the movement of price and as soon as the price rises, we make money by selling the shares)
  • In investment, we get profit after a long time, there is less risk in it. Because we buy the shares of good companies. (In trading, we get profit very quickly, such as 1 day, 1 hour, but there is more risk in it. Because the price movement is random in the short term)

The biggest difference between investment and trading is attitude. Bcoz

Investment - In investment, before investing in any company, we get a lot of information about it and analyze it. That the shares of the company whose shares we are buying will increase or decrease in the long time period.  (Trading - If we buy the shares of a company without studying the company. Have bought shares only by looking at the Price package of that company. So that as the price of the company increases, we earn money by selling shares. So we will call it trading)

Fundamentle Analysis - Friends study the company carefully and understand their business, we call Fundamental Analysis & we must do a fundamental analysis of the company before investing. But if we study the price of shares of a companies & try to predict its pattern, Then we call it Technical Analysis & We must do technical analysis of the shares before trading.

Types Of Trading

When we think about trading, first of all we have to find out which one to trade and for this we should know How many types of trading are there.

There are 4 Types of Trading

Scalping Trading

In this type of trading we buy the shares for a few minutes. And as soon as the price becomes a little bit incremental, then we earn a profit by selling the shares.

For Example - Suppose you bought 10000 shares of a company on 100 rupees Per shares. And after a few minutes, if the price of the shares is increased from 100 rupees to 100.50, then sell it and earn a profit of 5000 rupees. So this is what we will call scalping trading.


Intraday Trading

The second type of trading is call intraday trading. In this type of trading, we hold the shares for a few hours & the same day, before the market closes. We earn profits by selling the shares.

Swing Trading

The third type of trading we call swing trading. In this type of trading, we hold shares for a few days. & earn profit by selling the shares within one or two weeks.

Position Trading

Fourth type of trading is called position trading. In this type of trading, we hold shares form a few weeks to a few months. & then earn profit by selling them.

Can We Earn Regular Income From Trading


Friends, now we will know that we can earn regular income from trading. Yes friends, we can earn regular income from trading. But it is not possible to earn as much as possible.  

If you want to earn more money from trading, then you will need a lot of money. Friends, if you want to earn more profit in trading to invest money then we will have to buy more shares for which more money will be required. Along with money, We should have a good knowledge of technical analysis. Only then we will be able to understand the price pattern. And will be able to buy or sell shares at the right time. Along with this, We'll have to understand the use of stoploss well to keep the loss to a minimum. 

My Last Words
And friends, The most important thing in trading is to constantly learn from your mistakes & to not give up. Because every successful trader is successful only when he continuously improves his trading. So if you also want to become a successful trader then follow all these points well.

Forex Trading Meaning - How To Make Money Forex Trading

Hello friends, welcome to your blog, today we are going to talk when people invest money in the financial market. So they get to see 3 types of market there. 

Forex Trading Meaning - How To Make Money Forex Trading

Equity Market - Equity market is quite popular, we hear its discussions everywhere in India. What is the share price of Reliance Industries in the share market,how much has the Nifty increased in the bank, Many people invest in the share market, due to which a lot of people are also harmed and many people also become very rich. Many people get drowned in the stock market. It means to say that many people in the stock market, who have invested in the market every day, also have to bear huge losses. And some people also get a lot of benefits.

Commodity Market - After share market, which is popular in India, we know it as Commodity market. In this market we hear about Gold, Silver, Copper. 

Forex Market (Currency Trading) - In forex trading, we trade in DOLLERS ($) and INR currency. Very few people in India know about it because the risk in it is very low and the profit is also very low. But friends, let me tell you that the size of its Forex Market in the whole world is 5 trillions of dollars.

Forex Trading/Forex Market
Forex Trading Meaning - How To Make Money Forex Trading

Forex Trading Example

"If we calculate 5 trillion dollars, then there are as many stock exchanges in the whole world as in the United States which is the stock exchange and Which is the stock exchange of India (BSE). Even if we do the total of all these currencies, we will get less than this. More than the currency of the stock exchange of the whole world, we will find the currency of the forex market."

According to the statistics, as much as India trades in the stock market in 1 month, so much trading is done in 1 day in little forex marketing." The reason for this is that the volume in forex trading is very high.

I understand you with an example that Forex Trading is done. How works forex market? What does risk in Forex Marketing?  Like we recently saw that Reliance Company's shares fell 10% in 1-2 days, which means that 10% of the money is lost. 

  • Like, when we buy shares of bank nifty, they give us margin - For example, if you have 10 rupees, then it will give you a margin of 100 rupees, meaning that the goods will give 100 rupees. "8x margin remains in equity margin". But in forex marketing you get 25-30% of this margin. Which means you can invest 1000 rupees and earn more money in forex marketing than in equity market.
  • The risk in the equity market is high, in that it falls 10-20% of the market in 1-2 days, but the currency in the forex market is very low UP-Down. 
  • Because in forex marketing, currency like dollars fall very low for example, 10 paisa, 5 paisa, 2 paisa and that's how it grows. It is understood that when we Trading in forex marketing, the company's shares in every country are different. But the most trading is from the United States because that dollar's country is the most deserving from that dollar. 
  • Every country has its own comparision. Because every country knows about its economy. And focus most on the Other econom y of a country like the United States. Therefore, we can become more and more educated by learning about all these things and we can earn more money by investing. 

Now We Will Know What Is Forex Trading & How It Works?

For Example, Suppose you have 1 lakhs Rupees and you want to go to America, Rupee is not a US currency, to Indian Rupees America is of no use. so you will have to exchange in dollars. Now you have to go to the stock exchange to get your rupee exchange done. Now when you go to the stock exchange, it was said that if you give us 74 rupees, then we will give you 1 dollar. So when you converted your rupees into dollar on your stock exchange, you got $ 544. Now when you went to America, you did not spend his own dollars because the company raised all your expenses.So when you came to the airport and got your currency converted to India Rupees, you would get 1,20,000 Rs. Now you are convinced that when I changed the rupees into US currency, So I gave less money and now I have more money. So the airport Assistance said, Sir, when you gave your rupees, that currency was 1$ for 74 rupees and now it is 1$ for 76 rupees. So we will say that this is forex marketing/Forex Trading. 

There is a lot of platform available in the market, we will tell you which one is the best to invest. "HOW CAN TRADE IN FOREX MARKETING". I will recommend to you that you should trade with octafx. I will try to explain you with the image why you should trade with octa fx.

First of all, you have to visit the Octa Fx website. The best thing is that they have got the best awards. Like, he has got the award for Best Nigeria Best Forex Broker in 2020.

Octa Fx is a very good forex trading app, you can trade here very easily. because it is also a trustable One. The purpose of OCTA FX is that how to increase your profit.

IMPORTANT- Friends, I would advise you to check the platform on which you want to invest first." Because there are thousands of stock marketing platforms on the internet and many people get fraudulent here that breaks people's trust.

Octa Fx also gives you the facility of a Demo Account so that you can learn How To Trade In OCTA FX. How does it work? In the demo account you have 5000$ dollars for testing. With which you can learn to trade and also get to know the experience of researcher's. You can start with a minimum of $20 in octa fx. In OCTA Fx, you can easily deposit and withdraw from your Net Banking, PayPal, Debit Card, etc. You can trade by visiting their website from the web or you can start trading by downloading their app.

Manufacturing Account Definition - Format, Example, Preparation Method

Manufacturing Account Definition

The primary objective of creating a trading account, as described earlier, is to find out the profit arising from business actions (ie buying and selling of goods). But there are many institutions that purchase raw materials instead of purchasing finished goods from the market and manufacture finished goods on their own. Such institutions which are engaged in manufacturing activities, firstly create a factory account to generate the cost of production during the accounting period and thereafter create a business and profit and loss account. You need to know the balance sheet

Manufacturing Account

Features Of Manufacturing Account

  • 1. It is prepared only by those firms which are engaged in manufacturing activities.
  • 2. It is prepared to know the cost of production.
  • 3. All expenses related to factory operations are debited to this account.
  • 4. The cost of production as ascertained by the factory account is transferred to the debit of the trading account.
  • 5. This is the first stage of the final accounts and is prepared before creating a trading and profit and loss account.

Difference Between Manufacturing Account Or Trading Account

Manufacturing account |Trading Account

1. Objective  -

  1. Manufacturing Account - It is made to know the cost of goods produced.
  2. Trading Account - It is made to find the gross profit or gross loss.

2. Stage

  1. Manufacturing Account - This is the first stage of final accounts.
  2. Trading Account - This is the second stage of last accounts.

3. Content

  1. Manufacturing Account - All expenses related to manufacturing operations are written on its debit.
  2. Trading Account - All expenses related to the purchase of manufactured goods are written on its debit.

4. Opening and closing stock

  1. Manufacturing Account - The initial and final balance of raw materials and semi-finished goods are written in it.
  2. Trading Account - The opening and closing stock of goods manufactured and the last closing is written in it.

5. Balance

  1. Manufacturing Account - Its balance is transferred to the trading account
  2. Trading Account - Its balance is transferred to profit-loss account

6. Prepaid By

  1. Manufacturing Account - This is done only by the manufacturing institutions.
  2. Trading Account - This is done to prepare all the entities including the builder.

7. Debit & Credit

  1. Manufacturing Account - It displays only the debit balance which is the cost of production.
  2. Trading Account - It displays debit or credit balance. Debit balance indicates gross loss and credit balance indicates gross profit.

Preparation of Manufacturing Account

Because the purpose of preparing this account is to find the cost of production, so all the expenses related to the production of goods are written into this account. Often the following items are written on its debit side:

  • 1. Cost of raw materials consumed:- This is the first item written on the debit side of a factory account. It is calculated as follows.

Opening Stock of Raw Materials

Add: Net Purchases of Raw Materials

(i.e., Purchases less returns outwards)

Add: Freight and Carriage on purchase of Raw Materials 

Less: Closing Stock of Raw Materials

Cost of Raw-Materials consumed

It is worth remembering that the initial and final properties of the manufactured goods are not written in the construction account. These are written in the trading account.

  • 2. Direct Wages
  • 3. Direct Expenses
  • 4.  Factory Overheads: These include indirect materials, indirect wages and
  • Indirect expenses such as factory rent, factory electricity expenditure, factory building insurance, power and fuel, factory manager's salary, supervisor's salary, etc. are included. Depreciation and repair expenses of machinery and factory building, which used to go to the profit and loss account earlier, are also written in the manufacturing account.
  • 5. Work-in-Progress: Because manufacturing work is a continuous process, it is only natural that some goods remain semi-manufactured at the end of the period. Such semi-manufactured goods are called on-work. The opening stock of the current work is written in the debit side of the manufacturing account and the closing stock of the ongoing work is written on its credit side. The on-going opening stock can also be added to the manufacturing cost in the debit side of the manufacturing account and the closing stock can be reduced from it.

Credit Side:

Sale of Scrap: The amount received from the sale of contaminated or waste goods is displayed in the credit side of the manufacturing account.

Balance: The difference between the two sides of a manufacturing account is called the cost of production. This cost is written on the credit side of the manufacturing account and is transferred to the debit of the trading account.

Here you will get to read more good articles related to accounting.

Financial Statement Definition - Example, Format, Types

Financial statements refer to such statements that indicate the profitability and financial condition of the business at the end of the accounting period. The term financial statement includes at least two basic statements which are as follows:
Business Financial Statement
Financial Statement

  • Income Statement or Trading and Profit and Loss Account, which shows the results of business actions for the accounting period.
  • Statement of financial position or balance sheet statement (Balance Sheet), which displays the financial position of an organization at a certain time.

Financial Statement Definition

The financial statement summarizes the accounts of a business undertaking, the balance sheet statement shows the Assets, Liabilities & Capital on a fixed date." And the income statement shows the results of business actions of a certain period. Both these financial statements are called Final Accounts.

In modern times, in addition to the above two basic financial statements, two other statements are also included in the financial statements, namely, Statement of Retained Earnings and Cash Flow Statement.

Objectives of Preparing Financial Statements:-

  1. To present the exact results (profit/loss) of the business actions of the business organization;
  2. To present an accurate picture of the financial position (assets and liabilities) of the business institution.

Users Of Financial Statement

The information provided by the financial statements is used by the managing investors, creditors, employees, government etc. The utility of financial statements for various parties is as follows:

(1) Management

Financial statements help the manager in determining the profitability of various activities and different departments. Based on these, managers can check the progress of the business and decide for control of non-profit operations.

(2) Investors

With the help of financial statements, they can determine the short-term and long-term financial strength and profitability of the business. He can also study the sales trend, profit trend, the employees of the institution, the prospects of future progress, etc.

(3) Short-term creditors

They ascertain on the basis of financial statements whether the institution will be able to repay the loans when they become due and decide whether the loan given by them to the institution. To be increased, kept at the current level or reduced.

(4) The long-term creditors

Based on the financial statements, they can determine that
  1. Whether the institution will be able to pay the interest regularly and
  2. Whether the institution will be able to pay the borrowings when they become due. On this basis, they can decide to increase the loans given to the institution, keep it at the current level or decrease it.

(5) Employees

Based on the financial statements, employees can decide how much bonus can be received from the benefits of the institution and how much increase in wages is possible.

(6) Government

Government uses the financial statements of various industries to study their profit limits so that it can be decided to grant or withdraw various types of rebates and increase or decrease the production duty.

(7) Taxation Authorities

They use financial statements to assess income tax, sales tax etc.

(8) Other users

Such as professional associations, consumer organizations, researchers, etc.

Financial Statement Include

In financial statement, we include 3 reports which are able to give us complete information about a business. Basically, we make our financial statements by giving priority to these statements, but this is incomplete information.
  • Trading Account
  • Profit & Loss A/c
  • Cash Flow Statement

Types Of Financial Statement

5 Types Of Financial Statement - Which is very important for a business if we miss any one of these 5 statements. So we will not be able to guess the future nor understand our financial position better. We can find out the financial position of any business by comparing it with the previous year's financial data.

Income Statement

Two Types Of Income Statement
  1.                                 Trading A/c
  2.                                 Profit & Loss A/c

Balance Sheet

Statement Of Change In Equity

Cash Flow Statement

Note's to Account (Note to financial Statement)


Financial Statement Format

format of financial statement - Usa
Financial Statement Format


How Do You Prepare Financial Statement

We have provided you with the format of how a financial statement Preparation and how it is prepared. And which reports are included in it, we have also told you above. Here we will talk about some basic terms that will help you in making a financial statement of any business. For this, you also have to understand some basic accounting terms. We will tell you about the details of assets, liabilities, and equity and owner share capital, which we include. We also know the financial statement by the name of the Final Accounts.

Step 1: Verify supplier invoice receipt

Step 2: Verify Issuing Customer Invoice

Step 3: Unpaid wages paid

Step 4: Depreciation Calculate

Step 5: Value Inventory (Price list)

Step 6: Reconciliation bank accounts (BRA)

Step 7: Post Account Balances

Step 8: Review Accounts

Step 9: Review Financials

Step 10: Payment of income tax

Step 11: Close Accounts

Step I2: Issue Financial Statements


Who Prepare a Financial Statement

How to Make Final Account | Trading A/c | Profit & Loss A/c | Balance Sheet | Financial Statement - Nowadays, tax consultants or certified public accountants (CPA), Charted Accountant - create a final account/financial statement. How do we create a trading account and then with its help create profit & loss account and then balance sheet. When working in any accounting software, when we create a ledger and then enter it. That accounting software automatic generates all our entries. With the help of accounting software, our trading account and profit & loss account and balance sheet are automatically created. With accounting software we do not know how it is made. It is very important to have an accounting knowledge for which ledger it has impacted. 

Final accounts (Financial Statement) are settled from the Trial Balance - For this, we need to know which balanches are written in the trial balance and how it has been created.

Journal
|
|
Ledger
|
|
Trial Balance
|
|
Final Accounts
|
|
Trading Account      Profit & Loss             Balance sheet

  • First of all, we have to pass a journal entry in any company
  • Through a journal entry, we create an ledger.
  • We set up trial balance from Ledger.
  • When we create a ledger, our debit or credit balance comes out from it, we create a trading account.
  • That's why our trial balance is equal to debit and credit side. Our final accounts are prepared from the trial balance.
  • we make 3 accounts in the financial account  are - trading account, Profit & Loss A/c, Balance Sheet

Financial Statement Examples

How to Make Final Account | Trading A/c | Profit & Loss A/c | Balance Sheet | Financial Statement - Example Of Financial Statement

Sales: $3,200,000
Cost of goods sold: $1,920,000
Gross Profit: $1,280,000
Administrative overhead: $875,000
Profit before interest and taxes: $405,000
Interest: $32,000
Taxes: $128,00
Depreciation: $57,000
Net profits: $188,000
Cash: $60,000
Accounts receivable: $357,000
Inventory: $530,000
Fixed assets: $1,200,000
Total assets: $2,147,000
Accounts payable: $385,000
Short-term bank loans: $130,000
Long-term debt: $550,000
Equity: $1,082,000

Share Market Definition - Example, Tips, Demat Account

Share Market Definition

What is a share market? In a small definition, we will explain it in detail. To understand the share market better, we have to understand its terminology firstly we have to understand the meaning of share, what are shares. In the share market, companies sell their shares and raise money in public to make them the owners of the company.

Share Market

Share Market VS Stock Market

Share Market: A share market is a market where companies raise money by selling their shares where the shares of companies are bought and sold.

Stock Market: When we are talking about the stock market, we are not only talking about Equity but also the Bonds, Debenture, Mutual Fund, Forex, Commodity, Derivatives, Shares are all included in the stock market.

This is the only way we can buy and sell shares, we cannot buy and sell shares directly on the stock exchange. Because there are brokers on the stock exchange, through them we buy and sell shares.

Did you know who controls the stock market, then SEBI (Security & Exchange Board Of India) is the answer. Like, RBI (Reserve Bank Of India) manages the banking system.  If you want to earn money fast then you can trading.

It is very important for you to know that NSC (National Stock Exchange) is the largest stock exchange in India where big companies are listed. Nifty is a group of 50 companies. It is the main index of NSE.

BSC (Bombay Stock Exchange) is the 2nd largest stock market/Stock Exchange. Sensex is a group of 30 companies, it is the main index of BSE. 

If you buy some shares today and sell them tomorrow, then we call it BTST (Buy Today Sell Tommaro).

What Is Share With Example

Share - When the capital of a company is divided into small parts, then each part is known by the name of shares.

For Example - ABC Ltd is a company. And its capital is 10000. The capital of ABC Ltd Company is divided into 100 shares Then, The price of 1 share will be 100 rupees.

100 Shares * 100 = 10000 capital

When you buy the shares of a company, you become the owner of the same share of that company. Those who invest in the stock market are called shareholders.

Imp - I will advise you if you want to invest in the stock market, then first you should gain experience Or you can also invest through the Market Researcher/AnalysisTo invest in the stock market, you must first have knowledge of the market.

Important For Stock Market:-

  1. To invest in the stock market, you have to open a demat account.
  2. To invest in the stock market, you must first have knowledge of the market.
  3. Demat account opens in 2 ways, either you can open a broker through or you can open a demat account.
  4. To buy or sell shares, you have 2 ways to open a demat account/Trading Account. The demat account is linked to our savings account, so that the money from the shares gets in our savings account. You can also open a demat account/Trading Account by going to the bank. 

Difference Between Trading A/C & Demat A/c

  • Trading account: Trading account is required to buy and sell stocks, trading account is opened with broker.
  • Demat account: A demat account is required to hold the shares purchased, a demat account is opened with a broker.

Profit and Loss Statement (P&L) Definition - Format, Entries, Debit & Credit Side

Profit and Loss Statement (P&L) Definition

By creating a trading account, one gets to know the gross profit or gross loss as a result of the purchase and sale of goods. But the businessman has to make many expenses which are not written in the trading account, so every businessman is more interested in finding the net profit or net loss in the year. To find out, a profit and loss account is created in which all the expenses and income of the year are written off. If you are a student of a Commerece subject. So it is very important to understand accounting terminology as well as it is also important to know What Is Depreciation.

Profit and Loss Statement (P&L) Definition - Format, Entries, Debit & Credit Side
Profit and Loss Statement (P&L) Definition


Need and Importance of Profit & Loss Account

1. Knowledge of net profit or net loss - From the trading account only the knowledge of gross profit or gross loss as a result of business actions. Whereas the profit-loss account gives the knowledge of the net profit or net loss which is available to the business owner and which is credited to his capital account.

2. Comparison of profit of previous years - Profit and loss account is created every year. Therefore, by comparing the profit and loss account of the current year with the profit and loss account of the previous year, the real situation of the business can be studied. And based on the conclusions obtained, a future policy can be made.

3. Control of expenses - The expenditure shown in the Profit and Loss Account is compared to the expenditure of previous years. And the percentage of each expenditure by net profit is also determined and they are compared with these percentages of the previous year. Such a comparison helps in taking effective steps to control unnecessary expenses.

4. Help in creating the balance sheet - Only after knowing the net profit from the profit and loss account, the balance sheet can be made.

Did you want to know - What is Provisions & Reserve - Difference Between Provisions and Reserves

Profit & Loss Account Preparation

The profit and loss (P&L) statement is started by writing down the amount of gross profit or gross loss brought from the trading account. All the expenses which are not written to the trading account are written on the debit side of the profit and loss account. Administration expenses, sales expenses and distribution related expenses are mainly in these cases. These expenses are called indirect expenses. A profit-loss account is a nominal account, so all expenses are written on the debit side of this account (Debit all expenses and losses). Credit all incomes and gains are written in the credit side of the profit and loss account.

Profit & Loss Statement - Debit Side

Items to be written on the debit side of the profit and loss account

(1) Gross Loss - If the gross loss is known from the trading account, it is written first on the debit side of the profit and loss account.

(2) Office and Administration Expenses - such as the salary of office workers, office rent, lighting, post-telegraph expenditure, printing, civil expenditure, auditor's fees, etc.

(3) Selling and Distribution Expenses - such as advertisements, commissions, carriage on sale, bad debts, packing expenses etc.

(4) Miscellaneous Expenses - These expenses include interest on loans, interest repair expenses on capital, losses, donations etc.

Profit & Loss Statement - Credit Side

Items written in the credit side of the profit and loss account

(1) Gross Profit - First write the amount of gross profit made from the trading account in the credit.

(2) Other benefits: All income is written on the credit side such as income from appropriations, rent received, exemption received, commission received, interest received etc.

If the credit side of the profit-loss account is more than the debit side, there is a net profit which is added to the capital on the liability side of the balance sheet and if the debit side of the profit-loss account is more than the credit side. So there is a net loss which is subtracted from the capital on the liability side of the balance sheet.

Profit & Loss Statement - Journal Entries

Closing Entries Related to Profit and Loss A/c

Did you want to know how to create Journal Entries. What Is Debit & Credit Rules

1. The balances in the accounts of all expenses and losses are transferred to the debit side of profit and loss account by the following entry:

Profit & Loss A/c (DR)

        To Salaries A/c 

        To Rent, Rates & Taxes A/c 

        To Printing & Stationery A/c 

        To Postage & Telegrams A/c 

        To General Expenses Etc. A/c 

(Transfer of nominal accounts showing DR. Balances to the Debit Of P & L A/c)

2. All the profit and income accounts balances are transferred to the credit side of the profit and loss account by the following entry:

Interest Received A/c (Debit)

Commission Received A/c (Debit)

Rent Received A/c (Debit)

        To Profit and Loss 

(Transfer of nominal accounts showing Cr. balances to the Credit of P & L A/c)

3. To transfer the credit balance of the profit-loss account, ie the net profit.

Profit & Loss A/c (DR)

        To Capital A/c

(Transfer of net profit to capital A/C)

4. To transfer the debit balance of the profit-loss account, ie the loss due

Capital A/c (DR)

        To Profit & Loss A/c

(Transfer of net Loss to capital A/C)


Profit & Loss Statement - Format

Profit and Loss A/c
For the year ending...........

Dr (Debit Side)

To Gross Loss B/d
(Transferred From Trading A/c)

Office Expenses

To Salaries
To Salearies & Wages
To Rent, Rates &Taxes
To Printing & Stationery
To Postage & Telegram
To Insurance Premium
To Telephone Charge
To Legal Charge
To Audit Fees
To Travelling Expenses
To Establishment Expenses
To Trade Expenses
To General Expenses

Selling & Distribution Expenses

To Carriage Outwards, Carriage On Sales
To Advertisement
To Commission
To Brokerage
To Bad-Debts
To Export Duty
To Packing Charges
To Delivery Van
To Stable Expenses

Miscellaneous Expenses

To Discount
To Repair
To Depreciation
To Interest (DR)
To Bank Charges
To Entertainment Expenses
To Conveyance Expenses
To Donation and Charity
To Loss on Sale Of Assets
To Net Profit
(Transferred To Capital A/c)

Cr (Credit Side)

By Gross Profit B/d
(Transferred From Trading A/c)
By Rent From Tenant
By Rent (CR)
By Discount Received OR Discount (CR)
By Commission Received
By Interest On Investments
By Dividend On Shares
By Bad-Debts Recovered
By Apprentice Premium
By Profit On Sale Of Assets
By Income From Other Sources
By Miscellaneous Receipts
By Net Loss
(If Any Transferred To Capital A/c)

[2021] How to Open Demat Account on Upstox - Refer & Earn

Welcome to our new post today we will know in this post how we can now Open Demat Account in Upstox for free. [How to Open Demat Account on Upstox]. Friends, do you know why I chose Upstox for demat account? Friends, if you do not know much about Upstox, then after reading this article completely today, you will know everything about Upstox. Upstox is a great free trading platform and you can earn money by investing in share market. Open Upstox Demat & Trading A/C & Earn 500. Even if you want to do Forex trading, you are going to need a Demat account.

Earn Regular Income For Trading - Simple Ways 10000% You Make Money From Online Trading.

Open Demat Account on Upstox
Open Demat Account on Upstox

  • You need a demat account to buy digital gold to invest in the stock market. And today we are going to tell you about such a trusted website that gives you the opportunity to open a demat account for free. And at the same time gives you a chance to earn a lot. Friends, if you open someone's Upstax Demat account from your link, then you get 500 rupees. Many people are also taking advantage of this opportunity and are earning Rs. of lakhs. 
  • Share Market Definition - Example, Demat Account

To open an Online Upstox account, you need some Important documents which are as follows. To open an online demat account, You have to keep a printed copy of some important documents with you.

  1. Aadhar Card [Aadhar Official Website]
  2. Pan Card [For Online PAN Application]
  3. Email ID [Sign In Google Account]
  4. Mobile number which is linked with your Aadhar Card [Check Your Mobile Number]
  5. Blank white paper with your signature and it should have your photo on it.
  6. Bank Passbook [What Is Bank Passbook Immediately Know]
  7. Income Certificate or Bank Certificate [Bank Certificate VS Bank Statement] or ITR Return [File ITR Return & Check Status]

These are some important documents that you should have when you open online demat account, you do not need to go to cyber cafe Nor is the help of any brokerage needed, you can open your own online demat account on Upstox sitting at home from your Android mobile phone. Here I will tell you the step-by-step process to open a demat account

First of all, you have to visit the website of Upstox, a page will open in front of you & Some details enter.

  1. Email Address
  2. Mobile Number 
  3. & Click On "SEND OTP"

On the mobile number that you have entered, a message will come from UPSTOX. On the screen that is open in front of you, you have to enter the otp and then click on Sign Up.

Now the next page will open in front of you, in which you have to enter your PAN number [Permanent Account Number (PAN) - Income Tax Department], enter your date of birth, then you have to click on Next. Now a page will open in front of you in which you have to give some personal information.

  • What is your gender?
  • What is your marriage status?
  • What is your annual income?
  • What is your Trading experience?
  • What is your occupation?
  • Your father name as per your PAN card?
  • Are you political exposed?

You have to give the answer of all these questions according to you. Click Next [Is your country of Tax Residency other than India - Select "No". Now click on Next.]

Now you have to select the segment. If you want to buy/sell shares then you have to click on Equity. And remember you will also select Futures & Options then you will have to upload proof of income proof/Bank statement/ITR Return. Now click on Next.

Note:- You have to select all the options according to you, here I do not know how to open Upstox account. And I am telling it for those who are students or housewife.

If you do not understand futures and options, then you should choose only equity, after that you have to choose a brokerage plan [ICICI DIRECT - Best No. 1 Brokerage Plan In India 2021]

If you have high leverage, then you can choose the priority plan in which you will have to pay the broker Rs 30 per trade intraday. If you do not need much margin, then you have to choose only the basic plan and then click on Next.

After clicking on next, you will get Step No. 6 in which you have been told that you have been given one share free. So that you can do trading by demo, in this you have to click on Yes and then click on Next.

In Step No.7 a new page will open in front of you, in this you have to give your bank details. For example, in which bank your account is opened, you have to enter the IFSC code (Find IFSC, MICR Codes, Address, All Bank Branches in India)of that bank, you have to enter the bank account number.

Note:- You will get to see all the information related to the bank in PASSBOOK. With the help of passbook, you can fill these options well, do not make any mistake in it. Select whether your account is savings or current account. Now click on NEXT. Step No.8 A new page will open in front of you in which you have been told

That you have to put your signature in a blank white paper and take a photo of it from the mobile and then upload it. Now click on Next. Now a new page will open in front of you in which Connect your Digilocker with Upstax will get this option, you have to click on it.

Now a new window will open in front of you, in which you have to enter your Aadhaar number and OTP [Know About One Time Password] will come on the mobile number to which that Aadhaar number is linked and that OTP has to be entered and then click on Continue.

Now a new page will open in front of you in which you have been told that the documents you have uploaded on upstox. Now Upstox can download them and read them, for this you have to click on Allow.

Step No. 14 You have to upload your photo on UpStox, for this you have to click on Take a picture and then click on your selfie. After that you have to click on share location. You will be asked for your location permission, you have to allow it. You have to access your location and then you have to click on Next.

Step number 15 I will ask you if you want to open someone else's account from your link, for this you have to click on Refer New.  This type you can do later, Now you can click on skip

In step number 16, you have to enter your email address and then click on GET OTP. To visit your email address. There you will get an otp from Upstox, now you have to type that input. In type number 17 "click on Next".

In step no. 18 Click on "SIGN FOR FREE" & Then ask you "Do you have your mobile number linked with your Aadhar card" On this you have to Click on YES. & THEN CLICK ON CONTINUE. Upstox is giving you the opportunity to open an account for free during Covid-19, later you may also charge some fees. In step number 19 you just have to click on continue.

You will have to e-sign through your Aadhar card in step NO. 20. For which you have to click on the blue button of E-Sign with Aadhaar OTP like step NO. 20. Now you have to click on Assign Now. Now you have to write your name which is given in your Aadhar card and you have to write the same name. You have to select the {E-SIGN GATEWAY} and tick the checkbox and in the last click on the submit button.

Now you will reach the website of the NSDL, there, you have to enter the Aadhar card number of your 12 number and then click on Send OTP. The mobile number to which your Aadhar card is linked will receive an OTP on it, now you have to fill it and click on Verify.

In step number 25, you have to click here to download your assignment documents and click on proceed. Now you have reached step number 26, here you have successfully opened your demat account. Now your form will be submitted and within 2 or 3 days your demat account will be opened.

You have to wait a little, in 1 or 2 days your email will come on e-mail to open the account. And there you will be given client id and password so that you will be able to access the upstox demat account. Today we told you in this article how we can open demat account in Upstax for free.

Balance Sheet Definition - Example, Format, Assets, Liabilities

Balance Sheet Definition

After finding the net profit or net loss of the business, the businessman will want to know what is the financial condition of his business. For this purpose, a statement is prepared in which all the assets and liabilities of the business are written. The statement thus prepared is called a Balance Sheet because it is a table of balances that are opened in ledgers even after all the nominal accounts are transferred to the trading and profit and loss account. The personal and real accounts of the ledger are divided into assets and liabilities and written on the balance sheet. Liabilities are written in the left part of the balance sheet and assets in the right part.

Read Must - Profit & Loss Statement

Balance Sheet
Balance Sheet Definition

Definitions - Various scholars have given the definition of balance sheet as follows

J.R. According to Batlibai, "Balance sheet is a statement that is made to know the financial position of a business on a particular date."


Need and Importance of Preparing a Balance Sheet

The balance sheet serves the following purposes

  • 1. The main purpose of creating a balance sheet is to find out the exact financial position of the business on a given date.
  • 2. It gives knowledge of the nature and cost of all properties. Such as how much is the closing stock, what is the total amount to be received from the debtors, what is the amount of artificial assets, etc.
  • 3. It provides knowledge of the nature and value of liabilities for business.
  • 4. It is learned that how much capital is engaged in business at the end of the year and how much has been increased or decreased in this year.
  • 5. This shows that the business is financially competent or unable. Business is considered to be efficient when assets exceed external liabilities. In contrast, business is considered to be unable or insolvent.
  • 6. Based on the balance sheet, opening entries are made on the first day of the new year.

How To Preparing a Balance Sheet - Drafting a Balance Sheet

Characteristics of Balance Sheet

  1. Balance sheet is a part of closing accounts. This is the reason why all three of the trading accounts, profit and loss accounts and balance sheets are called as the final accounts collected. But the balance sheet is a statement 'No account. It has no debit and credit side and hence the words "To" and "By" should not be used in it.
  2. The balance sheet is a summary of individual and real accounts that are currently opened and not closed by transfer to a trading and profit and loss account. The debit balances of personal and real accounts are written on the right side which is called Assets Side and the credit balance is written on the left side which is called Liabilities Side.
  3. The sum of its two sides ie assets and liabilities is always equal. If the sum is not equal then it is assumed that there is some inaccuracy in making the balance sheet.
  4. It is made on a particular date and not for a period. The status statement is true only for the date on which it is created, since a transaction after that date can also change the status statement.
  5. It reveals the financial status of the business as per the ongoing business concept.

Grouping And Marshalling Assets And Liabilities In The Balance Sheet:

Assets and liabilities are grouped and written in a particular order in the balance sheet. The word Grouping means writing items of a similar nature under the same title. For example, the amount due from various customers will be written under the title Sundry Debtors. Likewise all Current Assets such as cash, bank balances, debtors, stocks etc. will be written under a different heading.

Marshalling means to write the assets and liabilities in a particular order. One of the following two sequences is used to sort assets and liabilities in the balance sheet.

In the Order of Liquidity - In this method, the sooner the asset can be converted into cash, the earlier the asset is written, such as cash balance. Assets that can be sold as late as possible are written later. The lowest liquid assets are written at the end, such as Goodwill. Similarly, in the liabilities side, those liabilities are written first. In other words, current liabilities are written at the top, followed by fixed or long-term liabilities and finally the owner's capital. Often sole traders and partnership institutions prepare their business balance sheets in the order of liquidity. The format of the balance sheet will be as follows by liquidity order

Note 1. The words 'As at' are used in the title of the balance sheet as it is true only on a certain date. After this one day the financial position of the Institution/Company may be different.

2. The sum of the two sides of the balance sheet is always equal.

3. Prepaid expenses are written in the title Current Property. Although they will get cash from them, but we will get their benefits soon.

It is very important to know the classification of assets and liabilities before the creation of the balance sheet.

Classification Of Assets

Assets can be classified according to their nature in the following ways:

(1) Fixed Assets - Assets that are purchased once and taken advantage of for many years are called fixed assets such as land and buildings, plantations and machinery, motor vehicles, furniture, etc. According to Finney and Miller, "Assets that are purchased for use in business operations and not for re-sale are called fixed assets.

Because the purpose of keeping these assets is not to sell them but to use them, so no consideration is taken in the changes in their market value and they are written in the balance sheet by deducting depreciation from the cost price.

(2) Curent Assets - Assets that a trader buys for the purpose of making a profit by reselling them are called current assets. The businessman wants to convert them into cash as soon as possible. Therefore, there is a change in them. According to Howid and Upton, "In general, current assets are those assets that are converted into cash under a normal (usually one year) process by the normal process of business. Examples of current assets are - cash, receivable bills, short-term. Appropriation, debtors, prepaid expenses, closing stock, etc. While evaluating these assets, it should be kept in mind that the closing stock is valued at the realizable value and the cost price, and a reasonable amount is deducted for the bad debt provisions when evaluating the debtors. .

(3) Liquid Assets - Assets which are in cash or can be converted into cash in a quick manner are called liquid assets such as cash, receivable bills, short-term appropriations, debtors, accrued income etc. In other words, if the closing stock and prepaid expenses are omitted from the current assets, the remaining assets are called liquid assets.

(4) Eictitious or Nominal Assets - These are those assets which cannot be converted into cash nor can any future gain from these assets such as profit and loss. The debit balance of the account and not yet written expenses such as advertising expenses etc. These assets are not really assets, but they are gradually transferred to the profit and loss account every year. And until they are completely transferred to the profit and loss account, their balance is shown in the assets side.

(5) Wasting Assets - These are the assets that are consumed or lost over time, such as mines and oil wells. These include patents and properties taken on / for a particular year.

(6) Tangible and Intangible Assets - Tangible assets are those assets which have physical existence and can be seen and experienced such as plant and machinery, buildings, furniture, livelihoods, cash etc. Intangible assets are those assets which have no physical existence and cannot be seen and experienced such as Goodwill, Trade Marks, Patents etc. Intangible assets are also valuable assets like tangible assets as they also help the firm to make profit. For example, fame is helpful in attracting customers and patent is actually the technology that helps in the production of goods.

Classification Of Liabilities

Liabilities can be divided according to their nature in the following ways:

(1) Fixed or long-term liabilities - These are liabilities that are to be paid after a period of one year or more. Such as Public Deposits, Long Term Loans and Debentures etc.

(2) Current or short-term liabilities - These are liabilities which are usually to be paid within one year such as bank overdrafts, creditors, bills payable, unpaid expenses etc.

(3) Contingent liabilities - These are the liabilities that have to be paid only when a particular event occurs, otherwise not. Such as: Ability to weave the receivable bills from the bank - If the bill acceptor dishonors the bill on the due date, then we will be liable to the bank for the amount of the bill.

(II) Litigation against us in court - Liability will arise if they are defeated.

(II) Guarantee of loan - If the firm has given bail to another person, then the firm will be liable if the person does not fulfill his / her liabilities.

Potential liabilities are not included in the balance sheet. These are written outside the balance sheet as information only.

How To Create Final Account 

Things to keep in mind while Creating Final Accounts

(1) If a trial has not been made in question, then if the trial is prepared first, it makes it easier to create final accounts. If there is any difference in the trial account, then it is written in the balance sheet by writing it in Suspense Ac.

(2) Accounts written in a treasury account are written only once in a trading or profit-and-loss account or in the balance sheet, while adjustments are double-checked.

(3) The items on the debit side of the treasury account are written either on the debit side of the trading account or on the debit side of the profit-loss account or on the asset side of the balance sheet.

(4) The items on the credit side of the treasury account are written either on the credit side of the trading account or on the credit side of the profit-loss account or in the capabilities side of the balance sheet.

(5) It should be noted that all the accounts related to the goods like purchase, sale, return and sale return are written in the trading account and the expenses related to buying and making the goods are also written in the trading account. . All other expenses and other nominal accounts are written into profit and loss account.

(6) All personal accounts and real accounts are always written in the balance sheet.

(7) Rent and electricity expenditure (lighting) will be written in the trading account only if clearly given by the factory, otherwise these will be written in the profit and loss account, assuming office expenses. For example, if 'Factory Rent' is given in the question, then it will be linked to the trading account and if 'Rent' is given only then it will be written in the Profit and Loss account.

(8) If the trial in question is not made up and it is not clear whether a particular account is income or expenditure, then that account will be treated as expenditure like Discount, Commission, Brokerage. Rent, etc.

(9) The assets and liabilities of the balance sheet should always be equal.

Balance Sheet Format

Balance Sheet
as at............

Liabilities

Current Liabilities

Bank Overdraft
Bills Payable
Sundry Creditors
Outstanding Expenses
Unearned Income

Fixed Liabilities

Loan Term Loans

Reserves

Capital

Add: Net Profit
Less: Drawings
Less: Income Tax
Less: Life Insurance Premium

Assets

Current Assets

Cash In Hand
Cash At Bank
Bills Receivable
Short Term Investments
Sundry Debtors
Closing Stock
Prepaid Expenses
Accrued Income

Fixed Assets

Furniture
Loose Tools
Motor Vehicle
Long Term Investments
Plant and Machinery
Land And Buildings
Patents
Goodwill

Equities Definition [What Are Equity Share In Investing]

What is the meaning of equities in stock market. What is Equity Trading and Equities Investing? If you want to know about equities on the internet, then read this article completely. Here you will find articles related to investing and trading on our website. If you also want to earn 700$+ a month by trading, then on our website you will find many articles related to investing and cryptocurrency, bitcoins, investing.

Equities Definition [What Are Equity Share In Investing]

Equities - Equity means the ownership of a business. We know that to buy a share of a company means to buy a small part of that company and in the language of investing, this small part is called equity. In other words, by buying the shares of a company, we buy the equity of that company.
Equities Definition [What Are Equity Share In Investing]
Equities Definition [What Are Equity Share In Investing]

For Ex.
Suppose 5 friends started a company together, all the friends invested Rs 2,2 crore in the company and then started the business with 10$ Crore and in the company's legal registration, they divided the company into 1Crore Shares and they decided Said that all the founders of the company would do the same work in the company. Therefore, the share of the company was also divided equally among all the friends in 20,20 lakh $. So every single founder got 20 lakh shares out of 1 crore shares of the company "We can say that 100% of the ownership/equities of the company is with the founder and its total value at present is 10 lakh doller because The company has 5 founders and each one has 20% equity in the company".

Now let us assume that the company needed Rs 5 crore to develop the company. For this, the founders of the company sold 50% equity of the company i.e. 50 lakh shares in the IPO (Initial Public Offering) . And took a total of 5 crore doller from the public.

Means - If you buy 1 Lakhs Shares = 1% Equities [and you got 1% ownership of the company.]
50 Lakhs Share = 50% Equities
Investing refers to the ownership of a company. The company sells its equity to the public. The more shares an investor buys in a company, the more equity he has in the company. That is why we call stock market as equity market, stock investing is called equity investing, and stock trading is called equity trading.

Note - Whenever you buy the stocks of a company, you buy the equity of that company.

Today we told you what is meant by equities in investing. If you liked this article, then definitely share it with your friends so that everyone can know about the stock market in a better way and start earning today.

Stock Market for Beginners | What is ShareMarket?

Hello friends, today I will tell you about the stock market, how you can earn money in the stock market, this post is for those people who do not know about the stock market or for those who are new in the market, this post will be very helpful.

Important - The stock market is not a Casino.

I want to enter in stock market, how do I enter in stock market, What is stock market, how to invest in a good company, how to do company analysis, long term investment [Investment Management] and short term investment. All these questions hang in the mind of a beginner. And today I will tell you about stock market. I will tell you everything openly, just if you need to read the post completely.

Stock Market for Beginners

To Invest in the stock market, you have to focus only on the successful people and not on those people who have suffered losses or always maintain positivity in yourself.

Stock Market for Beginners | What is ShareMarket?
Stock Market for Beginners | What is ShareMarket?

The stock market is always in front of you reality as a business man builds a very good business on the power of his knowledge.

You do not need a commerce stream for the knowledge of stock market, no matter what field you are from, just you should have some basic knowledge about it or if you are interested in stock market then you will be called a #stockmaster.

It is very important for a beginner to get a good direction of the stock market, then they can make their own according moves. How deeply you will know the stock market depends on you.

Trusting The Stock Market

1st Step

You should have full faith in the stock market, trust is the first step in the stock market because many investors suffer losses in the stock market and then they mislead other people that do not invest money in the stock market. Often those people who have half incomplete information, those people are sure to suffer loss. Many people consider the stock market to be gambling, there is a very interesting notion behind it as to why it is gambling.

Meaning of Stock Market - Stock Market is the place where we buy the stock of a company. [Stock means taking a stake in the company. Its direct meaning is that if the company will earn profit then you will also earn profit.] Therefore it is very important to have a right believe system in you.

Important - When you invest in any companies, do complete analysis of that companies and invest for long term.

  • You start investing in the stock market regularly.
  • Invest in blue chip companies. Blue chip companies are those which are very prosperous company, the value of their shares never falls because these companies are very profitable.

What should be the first step in the stock market? If you are going ahead to invest in the stock market. In this post, I will tell you about 5 very important steps. Friends, as I will tell you 1-1 steps, you will start knowing what you should learn in the stock market and what you needed. And when you come to the 5th step, you will get to know about the stock market.

What is the flavor of the stock market, what kind of test is there, in this I will tell you about all these in details today. To know about the stock market, you have to continue this post step by step.

What Are You Hire For?

2nd Step

Friends, now after understanding the 1st step of the stock market, you need to understand why you have come to the stock market. Many people consider the stock market to be gambling (Many people buy shares in the stock market because when the share price is low, they will buy the shares and then sell them as soon as the share price rises and earn profit.) Let me tell you in depth, people try to sell a stock before buying it, that means they keep only and only profit in mind.

Friends, there is no such stock in the stock market that will make you a crorepati overnight, for this you will have to invest in good companies for long term, wait and those people earn profit. And those who think of earning profit overnight, only those who understand the stock market as gambling.

Whether you invest or trade in the stock market, you have to keep your mind power clear that whether you invest or trade in the stock market, it can be your profit as well as loss.

"You can earn a lot of money from the stock market, you just need to understand the power of the stock market, which depends on your interest, how much interest you show in this field, how soon you want to learn trading in the stock market".

Just Don't Anyone Blindly

3rd Step

You must have heard about the stock market from many people on the internet or seen it in the news. But you get tips only and only from people.

Often you get a message on the phone that buy this thing and you buy it and you do not even try to know from where this message has come, how much this item will be worth. You have invested money on a random item. If you get profit then you also tell many people about that item and if you lose then you start abusing the stock market.

Friends, whether you are investing or trading, you should not need tips, you have to improve your own mind power, knowledge so much that you do not need any tip and even if you get a tip from someone, then you You will have to analyze yourself whether this tip is right or wrong.

If you invest money in the stock market by taking a tip from someone, then you are wasting your money, it will be your big mistake.

More Profit  More Knowledge

4th step

Friends, if you are investing in the stock market, then it is very important for you to learn fundamental analysis.

If you are trading then it is very important for you to know technical analysis and if you do not know fundamental analysis & technical analysis then you should not think about investing and trading, this field is not for you. You have to learn this which will be a long process.

Friends, it is not difficult to learn Fundamental Analysis & Technical Analysis, it is a very basic thing, but after learning them, you will have to learn many other terminology of the stock market, many people do it as indicators in the stock market. What are indicators and how are they used? Learning all this is very important for an investor.

If you do not have any knowledge of the stock market at all, then the chances of earning profit are very less for you.

Taste The Stock Market

5th Step

Friends, have you ever invested in the stock market? Have you ever bought shares of any companies? Friends, if you have never invested, then I will suggest that you buy the shares of a good company which you can get at a low price.

Buy a share of Rs 100-200, this will enable you to buy. Friends, you will get experience from this, you will get to learn a lot from a small amount.

By buying 1 small share, you will know how that stock looks in your portfolio, you will realize that the money will be spent or less for that share. If you do not know how to buy or sell shares, then for this you read this post of ours, here you have been given complete information from the details.

Note:- It is very important for you to have a demat account (Open Demat Account Online) for Investing OR Trading.

4 Types Of Stocks That You Should AVOID Investing In !

Successful stock investing requires a lot of discipline. Thousands of stocks are listed on Indian stock exchanges, and you have to find 10-15 good stocks to invest. For the remainder, you only have to say ‘no’.

Rule #1 of Stocks that you should avoid

As a primary rule, avoid investing in companies you don’t understand. If you can’t figure out how the company is making its revenue, what is the company’s business model, what are the products / services offered by the company, or what is the use of the products — avoid investing in that company.

4 Types Of Stocks That You Should AVOID Investing In !
4 Types Of Stocks That You Should AVOID Investing In !

For example, if you have zero knowledge of semiconductors or microelectronics, and do not understand the use of Zener diodes, MOSFETs, amplifiers, etc., avoid investing in semiconductor companies that manufacture these products. There is no way that you can understand market demand, product quality, future prospects, or even competitors.Instead, invest in companies you can understand. Some common industries that one can understand with very little effort are consumer goods, FMCG, automobiles, utilities etc.

4 Common Types of Stocks That You should Avoid Investing In:-

Also read :Investment Risk

Low liquid Companies

There are some stocks whose prices may fall continuously, but investors are not able to sell that stock just because there are no buyers. Getting out of a less liquid company can be quite stressful. Avoid investing in companies with low liquidity.In general, stay away from companies with a daily average trading volume of less than ten deficiencies. The higher its volume, the better. (If you are new to the concept, check out the versions of some of your favorite companies on Moneycontrol or other financial websites to get a good idea of daily trading versions.)

Also read :Trading

High debt companies

In companies, debt is like a big hole in a ship. Until and unless, these holes are filled — the ship cannot sail far. Avoid investing in companies with high debt. As a rule of thumb, stay away from investing in companies with too much debt and more than 1 debt / equity ratio in your balance sheet.

Falling knife category companies:

Do not try to catch a falling knife! Investing in companies whose share prices are constantly and substantially decreasing (eg- Gitanjali Ratna, Yes Bank, PC Jewelers, PNB, Suzlon Energy, etc.) is never a good idea. There is always a reason why the prices of these shares are continuously falling, and the market is punishing that company.Apart from this, there are thousands of listed companies in the Indian stock market that you can search. Trying to catch a falling knife usually injures your own hand if you are not trained to do so.

Low visibility companies

There are some companies in the Indian market whose information is not easily (and transparently) available on the Internet or financial websites. This is mostly the case for small and micro-cap companies.Researching such companies with low visibility can be a daunting task for investors. In addition, information manipulation is also likely if you cannot cross-reference the data or when reference sources are not reliable. Therefore, avoid less visible companies.

Also read :Investment