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Market: A market is where things are traded.

Anything that has value and can change ownership can be traded in a market.Trading is of many types and forms, and may involve the exchange of goods(Commodities), exchange of IOU's on goods(Futures), exchange of credit(Bonds), exchange of currencies... the works. But even if they gather in trading pits every day, and shout their lungs out through puts and calls... they like order. As a result, markets got classified on the basis of the physical nature of the items they traded in.


Stock markets:

Stock markets are those that make newspaper headlines everywhere. The Stock market of a country is widely considered as a barometer to how well an economy is doing. The BSE , and the NSE are two biggest stock exchanges in India.

The Sensex and Nifty are benchmark indices, and tracking these provides insight into short term and long term trends respectively. Stock markets basically allow companies to 'go public', i.e. they release a certain percentage of ownership of the firm to the public to invest, by means of an Initial Public Offering(IPO). The value of each share for an IPO is decided by a regulatory board associated with the exchange (For India its the SEBI (Securities and Exchange board of India)). As the public keeps investing in the scrip, the value of each share increases, and this consequently raises the value of the corporation as such. As usual, mega buys push the scrip up, and selling/short selling lead to corrections in the scrip.

Stock market and benchmark indices are very sensitive to global cues. For example... A rate cut by the US Federal reserve sees the Sensex soaring in the short term, because a lower interest rate means its cheaper to invest dollars anywhere... On the other hand... concerns over US recession have been hitting the Indian Stock market a tad harshly in the recent past.

Commodities/Futures Markets:

Commodities markets are generally used by people who are involved in the production of certain products that are traded in regulated commodity exchanges. These people hedge against an unwanted price fluctuation by agreeing to buy or sell a particular commodity at a certain price.

For example: A farmer producing Wheat intends to sell his produce at $4/kg, in the next 3 months. The spot price of wheat is hovering around the same mark, so its not really a problem yet. If the price falls however, he would run into a loss. In order to not run into a loss, this man hedges. He enters a contract wherein he has the right to sell his produce at say, 3.5$/kg. This way, even if the price of wheat bottoms out, he doesnt get cleaned out. That is, the farmer, though making a loss in the spot market, makes a significant profit in the futures market, thus ensuring minimum loss to him and his establishment. Vice versa, if the price of wheat rose above this mark, he would make a loss on the futures market, but make a killing in the spot market, which in a manner of speaking, limits his profit. Deciding where and when to hedge therefore can be a little tricky and requires experience.


The Derivatives Market:

Derivatives are financial instruments whose value is derived from the value of something else. The main types of derivatives are futures, forwards, options, and swaps. The main use of derivatives is to reduce risk for one party. Over-the-counter (OTC) derivatives are contracts that are negotiated and traded privately between two parties without the involvement of an intermediary or an exchange. Products such as swaps, forward rate agreements, and exotic options are almost always traded in this way. Exchange-traded derivatives (ETD) are those derivatives products that are traded via specialized derivatives exchanges or other exchanges. A derivatives exchange acts as an intermediary to all related transactions, and takes Initial margin from both sides of the trade to act as a guarantee. The derivatives markets are the financial markets for derivatives. The market is divided into two parts ie. for exchange traded derivatives and the other for OTC derivatives.

The Forex Market

The currencies market is perhaps the most important of the lot. Volume wise, its one of the worlds largest markets in the world. Question: If currencies are supposed to be traded, they must have some value... Question: How is this value decided? Its not really earth shattering when you finally realise that currencies are valued using, well, other currencies. One can trade in various currency pairs, for example the EURO/USD ( Which technically reads the amount of EURO's required to buy one US Dollar).


Though, the value of the currency pair can fluctuate owing to a number of reasons, the performance of one currency with another is largely attributed to the Import/Export balance that exists between these 2 economies, and comparitive growth rates. A country that has a deficit, basically fails to export the same value of goods or services, as it has imported. In order to procure these goods and services from some other country, this country (actually various corporations in the country, but big picture wise...) has to, in effect, buy the other currency, is lieu of its own. As this process continues, it becomes more expensive to procure goods or services, to invest in that country and so on. Result: Currency of Country A moves down in comparison to Country B.

A country that is posting strong growth rates will witness its currency become stronger with respect to others. The value of currency pairs is widely seen as a comparison of the strength of the 2 economies. Thus it is natural that currency values will also be sensitive to various global cues.


So now you know what different markets are. Lets trade:

The first thing one figures out while entering a market is its mechanism, that is what are the factors that cause a scrip/lot/contract to rise or fall, and how trends can be predicted. Once the tough part is out of the way, there are ways to capitalize on them:


Going Long:

When someone goes long, he expects the value of his Stock/future contract/commodity contract/Lot to increase. The intention is to sell at a margin at a later time, when the price is higher.

Shorting:

Who said you need to sell something only when you already have it? Short selling is when someone sells a stock/future before buying it at a later time. Whats in it for him? Well, between the time that he sells the lot and buys it later, the price of that lot drops, so buying it later isnt that expensive, which means: he pockets the difference. Many markets, thus, require traders to square off positions at the end of the days trade. Short selling is a high risk/high return strategy, and can result in small corrections in a scrip from time to time, and big corrections to your pocket, if not employed wisely. This trading technique came under the spot a few years ago, when studies claimed that it resulted caused certain scrips to nosedive, and that short selling was particularly harmful to small and medium scale scrips.

Stop loss:

A stop loss option is generally used when you do not want to be a part of the volatility in the market. Go long, and use a stop loss option, where you fix a minimum margin below which you will square the position. If the scrip crashes, exercise the option... and if you witness the rally, well that the beauty of it: its just an Option.


Support the Resistance:

A support level is the least stable value of a scrip in a time frame. A resistance level is the highest stable value of the scrip in that time frame, above which the scrip has failed to stabilize. Untill the time where the scrip falls below the support level OR rallies above the resistance level and stabilizes, it is considered to be range bound. It is important to understand the dynamics of support and resistance levels, because after that, its pretty much "Buy on a dip and sell on a rally".

So... now that we have seen conventional markets, lets take a look at some unusual but very profitable markets:


The Vegetable market:

The vegetable market draws sharp contrasts with any other financial market, because general trading strategies don't quite apply. In fact... the vegetable market has, over time, given rise to a trading strategy that is unique to the market itself: Haggling. The absence of a fixed price of any commodity at any given time completely changes the picture in terms of traditional trading methods. Though both men and women are capable of trading profitably in these markets, statistically, women have proved to be better and more profitable. The vegetable market made world headlines last year when Onions suddenly went on an unprecedented rally, due to a demand and supply mismatch. A certain Mr. Government was named responsible.

The Emerging market:

These markets refer to countries that align with other countries posting high growth rates, and call themselves the cornerstones of the next growth and wealth distribution cycle. These markets always claim that they are tired of subjugation by major world powers, and that a new era of emerging market power will usher in the next big leaders on the international economical platform. To demonstrate their newfound toughness, they call themselves the BRIC(k)s.

www.WeWin.cOm

Went to Saarang07... the chicks were hot, we won the Dramatics competition... well technically, since IITM won first place, like they always do, wether they participate or not... so getting second place wasnt that bad...

So well... that.

www.WeWin.cOm

Went to Saarang07... the chicks were hot, we won the Dramatics competition... well technically, since IITM won first place, like they always do, wether they participate or not...

So well... that.

How Much Dhoom is enough?

You know the 20 second teaser trailer of DHOOM-2(Yes the movie). Imagine, listening(Yes, at least we were exempt to watching it...) from 07.46 in the morning... till just about now... its noon now. And everyone in the hostel is screaming... Who the hell?? and What???

Sometimes...

When you are really content, mornings are easier to wake up into... you wonder?

Ive Reached...

So, yes... vacation is finally over, and I'm back to Tiruchy(Yepp... thats what its called...). Its early morning... I arrived just a couple of hours back after a very, very tiring flight. The Sem is already to a bad start. I think I can see bacteria... lack of sleep.

Ajwad

Whose life is it anyway? - ParT II - It wasnt me...

TdaYs SonG: Sound of Muzak - Porcupine Tree

It was just like any normal evening... maybe too normal, because what followed didnt give me time to think, like, at all.

It was Shab - e -baraat. Its this religious occasion(I have no definite idea on this one... sorry) and I was in the mosque. We have no mosques in campus, so I was about a kilometre down the NH-67, in a place called Thuvakudi(Do not bother trying to understand... just think... some place near college.). So after about an hour of being holy(I can hear the smirks... will you stop :p), I stepped out of the mosque. I was feeling very compassionate somehow, that day, so I went to the STD booth(I know what that sounds like, but bear in mind, I was in the mosque a few minutes prior...), called up grandma, paid my respects, called up aunty ji here, and uncle ji here, and did the whole, nice boy thing for a while, and then bought myself a pack of smokes, and de Dew, and was chugging away... like I said, it was just like any normal evening...

I didnt notice the White Maruti as it parked right in front of the adjoining Kirana store. I also didnt notice who was driving. Maybe I should have. I should have, damn my self centred self, for not being aware enough to notice my Industrial Instrumentation Prof, with family, nonchalantly getting off to do his daily groceries.

I was more than cursing myself, for chosing this locality to pray at(How was I supposed to know that he's gonna have to shop today, now, and park his car right in front of my face), for smoking a cigarrette right on the street where Dr. Sahab comes to buy ginger-garlic paste, but you know what... I didnt even have time to think all these things at that time...

He was walking into the shop when he spotted me, and I had the half smoked cigarette in my left hand, which also clutched the green Dew bottle. He looked at my face, and kept walking into the shop... did he notice me? Didnt he? He should have; a person would have been blind not to...

As if on reflex, the cigarette dropped from my left hand. I walked into the store trying to act normal, still clutching the bottle. I bought myself chewing gum, paid the person... somehow trying to validate my presense in the area. I didnt want to look too guilty, by going up to him and telling him that I was in the mosque all this while. All the while, he seemed oblivious of my presence. It started, and ended in a flash; I finished up with my soft drink, and left to college, hoping, praying even that it was all ok, that he had not seen the cigarette in my hand... that somehow, the green soft drink bottle had done its job... distraction. Later I realised, it had done just that. And I, my friends, was in deep trouble. Very deep.

I dont own an alarm clock. My theory is, any alarm that can be switched off is useless. Anyway, I woke up at 9.15... just in time for the second lecture. I pulled on whatever clothing that I had scattered and ran to department. I saw the first lecturer making his way out of class, and confident that I was early enough on my next class I walked in...

I saw Dr. Sahab(If you're wondering why Im calling him that, please take note... this thing is on the internet... no names...) standing right in front of my class. I had no problem with that. His eyes met mine. With a very stubborn lump in my throat I realised... it wasnt his class right now. I didnt have to wait long to find out who he was waiting for.

'You... yes... you'
(Ok man... you got me.)

'Why didnt you attend the first class...?'
(Ok... so thats all it was... wait... it couldnt be)

'Sir... Im not keeping well these days, *cough* *cough* (and another persisent...) *cough*'
(God, please be kind, I prayed to you only yesterday... please please... please)

'Follow me...'
(Do I even have a choice dude?)

He lead me to his office and took his throne. I was definitely in for something not so pleasant today. I didnt know why; I had a gut feeling(After all of the nonsense I've been through, you'd think I had realised, but no... its like my dad says..."Hum nahin sudhrenge"(We shall not improve...:))

'Do you smoke...?'

(is that a question?)

'Sir...'

(Should I... shouldnt I)

'Answer me...'

(improve your grammar)

'Sir, occasionally sir... but that too not within campus sir, I swear sir, you can ask anyone sir... sir? No sir...'

I was in total panic; I was reacting to every contortion of his face... somehow trying to placate him with whatever I could manage...

'How often do you drink?'

(What the....?)

'Absolutely not sir... I dont... never'

(What is he talking about...?)

'Come with me'

(Where... We actually have breathalyser apparatus?)

If this wasnt bad enough, I was lead straight into my old arch enemy, the H.O.D's office, who by now, was very much hatching a plot to take over the world... my world.

'Come in'

(Run away...)

'No... you stay out for a while, when we need you, we shall call you inside'

(Ok... FOUL: The both of us should get equal brainwashing opportunity)

The next ten minutes were spent in just trying to fathom... why booze, and why all of a sudden. And then... it struck me... it was very very clear. The green bottle was in my hand, partially masking the cigarette. He may not have seen the cigarette, but he definetely saw the bottle. That, compounded with the location that I was in.

Before we venture further, let me try and describe a schematic of the area where this incident occured. There are shops on one side of the Highway, which mainly consist of a kirana store, followed by a cigarette shop, a shop selling chicken, FOLLOWED BY 2 WINE SHOPS, and then a couple of buildings later, the STD and the mosque. 2 fucking wine shops, right where my HOD wanted them to be, right where the worst mix of circumstances could have decided to happen to me, on one fine normal evening.

'Come in'

(This better be good... be prepared to cry... be prepared to cry)

'Good morning....sir'

(I havent done anything wrong... not yesterday... strictly weekends only)

'Are you going to explain yourself' - Dr. Sahab

(Ohh man... this is not going to work... I cant tell him exactly what happened... Its just to perfect for them... deny... deny and cry... TeArs: ON)

'Sir, no sir... I dont have alchohol sir, I'm a muslim, its not allowed to us'

(They didnt look too satisfied...My professor, who evidently does not drink soft drinks in life, actually went to the extent of thinking that a Mountain dew bottle.... but I couldnt laugh just yet... status: bamboo up ass.... TeArs: ON)

'I saw you near a wine shop the other day' - My H.O.D.

(What... How the... you arent even part of the story dude...Goddamnnit... TeArs: ON... Work, work bastard )

At this point... I was too frustrated with the whole idea. They are framing me... right in front of my eyes, the whole conspiracy is being set up; I was not liking this. Not one bit. But I had absolutely no idea how I was to get out of this situation. One last shot... if this fucks up, it just does... for real: TeArs:ON

'Sir, I do not consume alchohol, for the last time, its not allowed in my religion, and as for why I was there, I was there because we had to pray for such and such a religious occasion. Yes, I am in the habit of smoking occasionally, that I admitt to; It is not a nice habit to have, and I am trying to curb it. If you still think I am lying sir, I have no other way to convince you. I do not booze'

(Yes.... Yesss I had nailed it... speeches always work... almost)

My H.O.D. spoke first - 'Fine... write an apology letter...'

I was numb with relief... I didnt even hear the rest... I already knew what he had to say. What I didnt realise that, in order to clear my name off this whole nonsensical allegation, I had proven my faculty member wrong. Bad... bad move. Like I said... everything compounded, it would never be the same again.

Dr. Sahab very quietly said 'Be warned though, we shall be watching you.'

(Not we... No we... you... you will be watching me... I know... )

'I assure you sir, I shall not fall into any sort of trouble'

(But I had a sneaky feeling... it was only a matter of time)

For once... I didnt do anything that day... but still wound up in shit. How bad can my luck get...?

But someone once famously said... What gets bad... can definetely get worse.... its only, a matter of time.

cheers,

Ajwad