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Commodity trading has been a cornerstone of India’s financial markets, offering investors exposure to gold, silver, crude oil, agricultural products, and more. With SEBI-regulated exchanges like MCX and NCDEX, traders today can participate in commodities either through intraday trading or positional trading.
But which strategy is better for you? This guide breaks down Intraday vs Positional Trading in Commodities, using real-world market insights, beginner-friendly explanations, and best practices.
Intraday trading means buying and selling a commodity within the same trading day.
Example: A trader buys crude oil futures in the morning expecting a price spike. By afternoon, they exit the trade with a small profit (or loss).
Positional trading involves holding commodities for days, weeks, or months depending on broader trends.
Example: An investor holds gold futures for several weeks, anticipating global uncertainties to drive prices higher.
For new traders, positional trading is generally safer. It provides:
That said, intraday trading can be rewarding if you have the time, discipline, and strategy. Always start small and never risk more than you can afford to lose.
Your choice of broker plays a critical role in both strategies:
👉 Swastika Investmart stands out for:
This makes Swastika a reliable partner whether you want to start with intraday strategies or positional commodity investments.
Q1. Can I start commodity trading without a Demat Account?
No. For delivery-based trades, you need a Demat account linked with NSDL/CDSL. For derivatives like futures, some brokers allow margin trading without holding physical commodities.
Q2. Is commodity intraday trading riskier than equities?
Yes. Commodities like crude oil or silver are highly volatile, making intraday trades riskier than equities.
Q3. Which brokers are best for commodity trading in India?
Brokers like Zerodha, Angel One, Upstox, and ICICI Direct are well-known. Swastika Investmart is trusted for research, advisory, and beginner support.
Q4. Can beginners make money in commodities?
Yes, but only with discipline, research, and risk management. Beginners should start small, preferably with positional trading.
Both intraday and positional trading in commodities have their advantages. Intraday offers quick opportunities but comes with higher risks. Positional trading allows you to ride long-term trends with less stress.
For Indian investors, the key lies in aligning your strategy with your risk appetite, time availability, and knowledge level. And most importantly, trading with a SEBI-regulated, trustworthy broker like Swastika Investmart ensures safety, support, and research-driven guidance.
The stock market offers various trading platforms for investors to trade in the stocks without any hassle. This is the place where individuals invest their funds for the long term. However, there are other traders too, who enter these markets with the purpose of making small quick profits by trading for minutes or hours.
These traders are known as scalpers, who believe in making immediate profits rather than waiting for the long term.
Before getting a dig deep into this, let’s understand how scalping can be used to collect huge profits through small trading techniques.
If you have heard the name scalping, you would be wondering what these scalpers are and how they achieve profits from the deal.
Scalping is a short term trading strategy used to achieve profit from the volumes of trade placed, rather than focus on maximizing capital gains on each trade.
These are short trading styles predominantly used in intraday trading. Scalpers trade frequently and in small trading sessions.
The name scalping got famous due to the traders who adopt such styles - they quickly enter and exit from the market by making small profits from a large number of trades, throughout the day trading.
A scalp trader usually follows a strict exit policy as one huge loss could eliminate all the profits made throughout the day. Therefore this trading style requires discipline, stamina and decisiveness.
If one possesses these qualities with the right strategy, he/she can become a successful scalp trader.
Scalp traders often enjoy the trading style that it requires. However, to achieve successful deals, you are required to execute numerous technical trading techniques to identify profit opportunities in the market.
Before answering the question, how does scalping work, lets understand the trading mechanism of scalping.
Scalp trading is a short term trading style that includes buying and selling of assets multiple times to book profit. Trading multiple times allows a trader to earn from the price difference.
It involves buying an asset at a lower price and selling at a high or vice versa.
Scalpers mostly try to find out the highly liquid assets that are volatile in nature i.e. these assets do frequent price changes during the day trading. Do remember, for scalping, it is highly important for an asset to be liquid, only then will you book profits throughout the day or otherwise you may face huge losses.
Scalpers believe it is easier to make money through small deals because it is less risky from the market volatility perspective.
There are other traders too, who hold onto their position for some weeks or months for making a huge profit. However, scalpers believe in making multiple profit opportunities within a small span than the bigger one.
Here some principles of scalping that every trader needs to follow:
Make Small Moves:
Small moves are easier to obtain than large moves. For making a huge profit, the stock market has to be insatiable i.e. it requires a high imbalance between supply and demand. In such situations, small prices are comfortable to deal with.
Small Moves happen Frequently:
Small moves in the stock market always work the best. Even many experienced traders use small moves when they see the market is quiet for some time.
Lower exposure Limit Risks
A brief exposure in the market reduces the chances of running into an adverse condition.
Trading methods used by Scalpers
While other trading styles like position trading use fundamental analysis, scalp trading however depends on technical analysis. This is because technical analysis includes identifying the historical price movements of assets and comparing them with the current asset’s price. For this, scalpers use different charts and patterns.
The comparison of historical data with the current data helps scalpers observe patterns and predict future price movements with ease.
Scalpers use charts and patterns and observe them with a specific timeframe. In other words, they do analysis in small time frames which are the shortest of all trading styles.
An intraday trader uses five minutes or 10 minutes trading charts to make five deals a day. Scalpers, on the other hand, uses a time frame of 5 to 10 seconds to make 50 to 100 trades during the day.
Scalpers play smartly with the trading, also they use several market’s tactics to achieve a high speed of trading. Such tactics are the market’s time and sales - a record of buying, selling and cancelled transactions.
Firstly, scalpers need to minimize the usage of multiple technical indicators. Trading indicators are basically the plotted lines on the price charts that help traders to identify whether to buy or sell assets.
For a scalp trade, it would be beneficial if you invest in profitable stocks as it will help you achieve more profits throughout the day. Also, the quality number of trades in a single day makes your margin requirement and risks reduced.
Margin is the borrowed funds that brokers lend to the traders so that they can buy securities more than they afford.
As a scalp trader, it is important to master certain strategies that will give you bountiful benefits of profit booking. Traders apply multiple strategies which confuse them with which strategy should be used or which one is not?
For example; you made 10 trades and used various methods to execute them. Now you would get confused as to which strategy worked well for you? Therefore it would be ideal if you use 2 or 3 strategies and execute your trade order.
Scalping is a short term strategy that is not limited to futures alone. In fact, you can use scalping trading in forex and stocks as well.
The preferred market for scalping are:
Reducing losses is one of the most significant concerns a trader must pay attention to. A scalper trade in many traders in a single day. Some scalpers book huge profits from it where others suffer a loss. Therefore, a scalper needs to learn to cut down the losses in every losing trade to mark a good profit in scalping.
Scalping is a process where a trader uses short time frames, chart plans to book a profit throughout a day. Scalping is a difficult trading process that demands dedication, speed and discipline to execute scalp deals.
If you are an experienced trader who knows how to trade intraday and aims for short term trading, you can go for scalping trading. However, if you are not aware of intraday trading strategies and wants to invest in the long run, scalping is not your cup of tea. Choose wisely and execute your trades according to your trading styles.
The second wave of coronavirus seems to be very dangerous as it has badly hit the Indian economy. With new cases rising every day, state governments immediately came into action and imposed strict restrictions to curb the resurgence.
Although the curb is weaker than last year's pandemic, it somehow has started to affect several business activities.
Like last, the second wave of COVID 19 would heavily impact India’s Gross Domestic Product (GDP) growth in the coming months.
If we talk about business activities and the economy then the Indian stock market is also not untouched by this.
However, pessimism hasn't come up with the equity trading market so far. If you look at the last two month’s data, you will get to know that the NIFTY50 gets down by only 7% from its all-time high of 15,431.75.
Then what's the reason behind the market afloat?
Despite the critical situation across the country, analysts point towards the two factors that still maintain complacency in the stock market.
Several traders and expert analysts said that the global peers are doing well and that's the reason the Indian stock market trading is also performing well.
In other words, Global equity markets in the US have been in a good condition which is the main reason behind the drifts of the Indian stock market, The S&P 500, Dow Jones index touched an up of 4,195 and 34,200, this month.
It clearly shows that global equity markets are performing outstanding well and that makes a positive rub off on Indian equity markets as well.
As of now, we have not experienced a major decline in Indian equities despite having one of the highest infection rates in India - said Mr Sanjay Mookim, Research Head, JP Morgan Chase.
Besides, the hindsight of Indian investors makes the equity market more stable than before. The second wave reminds them of the mistakes they made in last year’s pandemic.
Therefore, they clearly say, even if the index goes down, they also go up. Also, last year, many fund managers made a huge mistake by selling a majority of stocks, this year they wouldn't.
Also, we have seen the equity market has bounced back from its position and hence the aggressive selling has not been done by many people, this time, Majoom said.
Naveen Kulkarni, CEO at Axis Securities Ltd, stated that “Prior experience shows how the stock market made a massive comeback post last year’s pandemic and therefore we don’t expect investors to offload equities hugely this year. This is because as the vaccination picks up the pace, the curve will flatten.
When a nationwide lockdown was announced in March 2020, the Nify50 went down by 13%. After 1 year, shares have grown up by double or sometimes even thrice. A recent analysis done by Mint report, in Nifty500 index, the stocks have shown the growth of more than 50% than last year and 247 stock’s price goes up by more than 100%, which is unbelievable and beyond the expectations of Indian investors.
Besides, the positive factors by global markets, RBI also put its eye on the Indian stock market. The monetary policy members of RBI still get worried about the economic growth. They are not in a favor of complete lockdown in the country.
Experiencing the rising cases of Covid positive, FIIs have sold equities worth $934 million so far this month.
Analysts suggest that your portfolio along with asset allocation tells your gain and loss. If you put loads of equity stocks in your portfolio, then it can also be quite risky as the stock market is seeing a bit of a downward trend. Therefore, it is suggested to add some growth stocks to your portfolio as it will minimize your risks.
While the second wave of COVID poses challenges to the ongoing economic recovery, consumers and businesses have adapted to the new normal, and lockdowns are likely to be localised; hence, we do not expect this wave to derail the economy. Therefore, we don't expect any significant impact on aggregate earnings.
Amidst this second wave of the pandemic, some stocks are still performing exceptionally well. Here is a list of stocks to Bet Upon:
1. Divis Laboratories
Divis Laboratories is considered one of the leading manufacturers of Active Pharmaceutical ingredients (API) in the world. As per the reports, the company’s growth looks promising due to the diversification from China into other countries including India.
As many global players try to minimize the dependencies on China and prefer In dia, companies like Divis Laboratories remained well placed to capitalise on such opportunities.
Also, the company announced the construction of the Divis Unit-III Facility at Kakinada, East Godavari District, Andhra Pradesh.
2. CDSL
CDSL stands for Central Depository Service Limited. The company facilitates the transaction and holdings of securities in Demat form and settlement of trade which are executed on a stock exchange.
Other services include KYC services in respect of investors to capital market intermediaries, holding insurance policies in electronic form and other online services such as e-Locker, e-voting etc.
If we talk about the market share of CDSL, it has witnessed a massive growth from 14% in FY14 to 51% in FY2020 in the market share.
3. Dr. Reddy’s Laboratories
We can't ignore the performance of Dr Reddy’s Laboratories. Amidst the pandemic, the company has managed to generate revenue of Rs 4,930 Cr in FY21 which is up by 12%.
4. HDFC Bank
The bank’s strong fundamentals with good quarter to quarter growth makes HDFC one of the best choices among Indian retail investors. The company’s operating profit goes up by 22.83 per cent. Good revenues (up 29.10 %) and the approaching summer seasons are the good factors of this stock.
The company gave a strong performance, with its operating profit going up by 22.83% whereas the revenues (29.10%) and profit (22.35%) also showed a positive side.
Volta's growth in FY21 is also fascinating. Its operating profit (53.44% up), revenue (22.14% Up), gross profit (up 22.35%) and a reduction of interest expense make this stock is one of the highest-value stocks in the Indian stock market.
Investing wisely is key to building wealth over time, but one common question that many investors have is: "When is the best time to invest?" Understanding market timing can help you make informed decisions and potentially enhance your investment returns. In this blog, we'll break down what market timing is, why it's important, and how you can approach it in a simple and straightforward way.
Market timing refers to the strategy of making investment decisions based on predicting the future movements of the market. The goal is to buy low and sell high, or to avoid buying when you expect the market to fall. Essentially, it's about finding the optimal times to enter or exit investments to maximize profits or minimize losses.
While market timing sounds appealing, it comes with significant challenges:
While perfect market timing is elusive, you can use several strategies to improve your investment decisions:
The best time to invest is not about pinpointing the perfect moment but about adopting a strategic approach that aligns with your financial goals and risk tolerance. While market timing can offer potential benefits, it also comes with challenges and risks. By focusing on long-term investing, dollar-cost averaging, and keeping up-to-date, you can make more insightful decisions and improve your chances of achieving your investment goals. Remember, successful investing is often more about strategy and discipline than trying to time the market perfectly.
Last year we faced a pandemic that was very difficult to comprehend not just for individuals, but also for the overall economy.
Now, even if the second wave of a pandemic is still on the rise, the S&P BSE Midcap Index has outperformed the benchmark S&P BSE Sensex Index in the last five months since the end of 2019.
If we compare the performance of mid-cap stocks to last year, we will get to know that these companies had suffered a lot in 2019 but today, we don't see a major change in these stock’s prices.
In fact, the outperformance of India’s mid-cap stocks over their larger peers may take a deep breather, as per the new investors. In the fiscal year 2021, the BSE midcap index rose 91% as India’s market capitalization rose up to Rs91 trillion in a year and hence we can predict that the BSE Sensex Index has outperformed the Sensex post end of the pandemic; according to Bloomberg data.
Even the smaller stock of mid-cap companies has gained approximately 33% in a short period, which is more than double according to the set benchmark.
As the mid-cap stocks outperformed the large-cap stocks in 2020, this year the experts predict that these stocks may hit a pause because of the second surge of COVID 19 infections across the country.
Due to the sudden pandemic, many investors are seeking large-cap stocks, especially in Bank stocks. In the current situation, everyone wants to play safe and therefore, investors find large-cap stocks (primarily bank stocks) are the safest options to invest in.
Mid-cap stocks may take a pause for some time but the performance depends a lot on the pace of vaccination. Last week, the Indian government announced that the vaccines will be available for everyone ranging over the age of 18, applicable from May 1.
As of now, India has vaccinated over 13 crore vaccinated doses and by doing this, the country becomes one of the fastest nations to vaccinate many people within a short span of time.
Earlier, investors used to be attracted towards mid-cap stocks as these stocks were relatively cheaper than other stocks, but that’s not the condition anymore. Nowadays, large companies are better equipped to handle crises and therefore these stocks are becoming the top priority of investors.
Mid-cap companies in India are those who have a market capitalization of Rs 5k Crore and less than Rs 20k Crore. These companies come under the top 100 companies that are listed on the stock exchanges (BSE and NSE). If we compare mid-cap stocks with the small caps, you will find out that the mid-cap stocks come with a moderate risk as compared to small-cap stocks. The risks of these stocks are comparatively higher than large-cap stocks.
Another advantage of applying for mid-cap stocks is that these stocks offer an opportunity for growth and in future, these stocks perform well with outstanding returns than large-cap stocks.
Mid-cap stocks are mainly responsible for boosting up the market share and profitability.
According to the present situation, the markets are in rallied mode, and when such things happen, investors are generally inclined towards large-caps, however, after the crash of 2020, investors have started to channelize their portfolio into mid-cap and small-cap stocks.
The primary factor that worked in the favor of mid-cap stocks is its low-interest regime that has been controlled by the Reserve Bank of India. Because of the low-interest rates, the capacity of taking risk appetite increases, which makes investors invest more in mid-cap stocks than other stocks.
Experts see a strong connection between the midcap index and repo rates. High liquidity and moderate risks are the major factors that contribute to the mid-cap rally.
A brokerage house says, whenever there is a disturbance, it has been followed by outperformance in mid-cap and small-cap indices. The same trend has been noticed in 2009, 2016, and 2017. This year: in March 2021, the Midcap Index outperformed both the Nifty Small-Cap and Nifty 50 indices.
If we see the performance of the Nifty Midcap index over the others, then last year, the Nifty mid-cap index bounced back by over 70 percent post-pandemic. However, Smallcap indices gained 19% in 2020.
As the second wave of infections is still on the rise, the major indices of India Sensex and Nifty have seen some contraction this month. On April 20, Sensex fell 10 percent, after maintaining an all-time high of 52k levels in February. The Nifty has also gone down by 6% to 14,296 levels on April 20, after witnessing a peak of 15k levels.
Looking at the current scenario, investors are moving towards large-cap stocks considering it as the safest option to invest at this time.
However, the movement of investors toward large-cap stocks is temporary, they are doing this only because of market volatility. Once the market returns to its original pace, investors will prefer mid-cap stocks over long-term stocks.
The ease of availability of vaccines, and economic recovery are some of the factors that may decide the market way; which way the stock market will move in the future.
According to the credit rating agency, Moody, the second wave will definitely hurt the economy which may affect the country’s future growth, however, the agency has also stated that the economy will grow in the double digits after a few months.
If the second wave curbs quickly and the economic resurgence gets started then mid-cap stocks will become the investor’s first choice over large-cap stocks. In 2020, when the stock market fell, the market saw a big bull which extended up to 2021.
Due to the unpredictability of the stock market, mid-cap stocks too had an unbeaten run. Although the mid-cap market sees a slower pace in the market, they will rise once the market regains and all things come at a normal pace.
Over the past few years, many global technologies and fund houses have started giving you an option to invest in them. One such asset company is Mirae Asset, which is all set to open an NFO among the people of India.
Mirae Asset Investment Managers India announced the launch of two NFO (New Fund Offer) - Mirae Asset NYSE FAANG + ETF and NYSE; an open-ended fund of fund scheme mainly investing in Mirae Asset NYSE FANG + ETF. According to the news, the NFO is open for subscription between 19 April to 3 May 2021.
The house is offering you a fund of funds (FOF) route to invest directly in ETF schemes.
Exchange-Traded Funds or ETF’s are one of the types of investment funds that are traded on the stock exchange.
ETF’s are quite similar to mutual funds except one that ETF’s can be bought and sold throughout the day on the stock exchanges just like stocks while mutual funds are bought and sold based on their price at the end of the day.
A FOF or funds of the fund is nothing but a mutual fund scheme that allows investors to invest in the units of other funds. For instance, the Mirae Asset NYSE FAANG + ETF is a fund of funds that will invest in the units of Mirae Asset NYSE FAANG + ETF.
Here the NYSE FANG Plus Index (NFPI) will come into play. This is because NFPI will provide exposure to today’s highly traded top 10 tech giants in the world which are listed overseas. These tech companies include Facebook, Apple, Amazon, Netflix, Google, Tesla, Twitter, Alibaba, Baidu and NVIDIA.
You might have heard the popular acronym FAANG which stands for Facebook, Apple, Amazon, Netflix and Google (Alphabet Inc). Now, the FAANG word has spread as the five other stocks have been added to it.
Needless to say, these tech giants are extremely popular all over the world as they offer bountiful services that are used by millions of people across the world.
Therefore, if these businesses are put together in one portfolio, they offer a large number of profits as they have the ability to grow in the different geographies of the world.
If we talk about the past data, we get a detailed insight into NFPI as the index has managed to deliver 33.41% annualized returns between September 2014 and March 2021. The percentage amount is quite large if we compare it to NASDAQ - 100 which has given a 20.77% return between the same years, and 13.23% for the S&P 500 said by the reports of ICE Data Indices.
The fund offers exposures to the top industry leaders in their respective segments, which is a plus point for every individual. This is because investing your money in these companies can minimize the chance of risks associated with the business. These businesses hold minimum risks as most of the businesses present in this index are known for their innovations.
Since these companies are not listed in Indian stock exchanges, a FOF can act as a good way to invest in these established technology sector leaders. Also, including these stocks may create a beautiful diversification to your portfolio.
The addition of the top 10 tech companies into the index makes it highly concentrated. This means investors who saw a dream to invest in this index may be exposed to concentration risk. Stock market is full of volatility and hence it would be beneficial for you to be aware of the downward volatility.
Secondly, these businesses face numerous regulatory changes in many countries which may affect the stock’s price. Also, these companies often face several acquisitions by the policymakers of different countries which could lead to huge risks and downward volatility.
The subscription date for both funds starts on April 19, 2021, while the closing dates are different. The closing date of FAANg +ETF is on April 30, 2021, whereas the closing date of FAANG +ETF fund of funds is on May 3, 2021.
The Mirae Asset FAANG+ETF will be handled by Mr Siddharth Srivastava while the Mirae Asset FAANG+ETF FOF will be handled by Ms Ekta Gala.
The minimum investment amount required by both the schemes will be Rs 5000 and multiples of Re 1.
The Mirae Asset FAANG+ETF FOF will offer investors multiple options such as regular plan and direct plan.
Each stock’s weightage in NYSE FAANG+ Index is equally weighted that consists of highly traded growth stocks.
The NYSE FAANG+Index will allow Indian stock trading investors to invest in these potential stocks like Facebook, Apple, Amazon, Google, Tesla, Twitter, Netflix etc.
It may be noted that 7 out of 10 companies in the NYSE FAANG+ Index have made it a list of top 50 innovative companies with exceptionally well innovative ideas.
The Number of Funds managed by Ms Ekta Gala is mentioned below:
Mirae Asset NIFTY 50 ETF
Mirae Asset NIFTY Next 50 ETF
Mirae Asset ECG Sector Leader ETF
Mirae Asset ECG Sector Leader FOF
Mr Siddharth Srivastava, fund manager of Mirae Asset NYSE FANG+ETF said: this index gives Indian investors a new way to put their money in these highly brilliant, growth innovative companies. Through these investments, Indian investors now can invest a small part of their money into these shares and participate in the growth stories of these companies.
It has been seen that many FIIs and global investors have put their eyes on Indian stock market and investors. Many top market gainers have been constantly researching on Indian stock exchange and analyzing the pattern of the stock market.
By doing this, most of them have started to invest in the Indian stock market. Also, they want many retail investors to contribute to the top-notch stocks.
Therefore, they came with the idea of ETFs and added FAANG stocks with ETFs so that many Indian investors can benefit from these stocks.
The primary objective of these companies behind the diversification of these stocks among different geographical areas is the expansion of shares among different retailers and investors so that they can evenly contribute towards the growth of these top giants.
As far as the doubling of money is concerned, penny stocks come second to none. This is because such stocks present a wide range of opportunities for new investors as well as experienced both.
And when it comes to investing in money, investors often seek mid-cap and large-cap stocks, however, the majority of them neglect penny stocks.
Penny stocks are small stocks and come under the small-cap category. If you are a regular trader or investor, you must have heard the term penny stocks. Well, these are small-cap stocks that attract minimal pricing. According to the Indian stock market trading scenario, stocks whose market capitalization is less than Rs 10, comes under penny stocks.
Due to low market capitalization, these stocks seem alluring to many investors as these shares are available at low price and investors would purchase more shares with low investment amounts.
Another important reason behind the strong hype of penny stocks is, they have a low frequency of trading, their prices are subjected to sudden and high levels of volatility.
Let’s understand penny stocks with a suitable example:
A company XYZ Limited has a share price of Rs 500 and a penny stock to be Rs 5. If an investor has a capital of Rs 10,000, they would be able to buy only 20 shares of the established company. With the same capital amount, they can purchase the penny stocks of 2000 shares.
If you are new to the stock market, then penny stocks can act as a good choice for you. This is because penny stocks enable you to learn the ins and outs of trading first hand, i.e stock market learning. Since the price of penny stocks are low, investors purchase a high volume of penny stocks with a limited capital amount. This also helps investors to minimize their losses.
Penny stocks are not traded in the share market frequently. Due to a low volume of trades, investors may find it difficult to find both buyers and sellers. However, they can overcome this limitation to a certain extent by holding the shares of penny stocks for the long term.
Penny stocks are easy to trade and therefore many investors especially newbies find it easy to trade in the stock market. Price movement of penny stocks are speculative and require very less methodical technical analysis. This makes investors the perfect choice for you if you are just making an entry into the world of the stock market.
There are multiple companies with good financials and growth potential that are being traded for pennies. By identifying these companies, investors can generate good returns and watch their investments grow.
Penny stocks can be considered as a miss or hit opportunity. Companies issuing them might grow into large organizations and give a higher yield than average returns.
Some of these stocks can turn out to be multi-bagger stocks. This means some penny stocks can generate returns of more than 100 per cent against their investment amount. And, if some penny stocks give a return ten times its investment value then it is considered a ten-bagger.
Hence, if investors could include these stocks in their portfolio, these stocks could exponentially increase their returns and have a large chance to outperform mid-cap and large-cap funds.
To find out the best penny stocks which have the potential to be multi-baggers, investors need to go through thorough stock market research.
Let’s understand it with an example:
Suppose Mr X invested Rs 10,000 in penny stocks of ABC Pvt company. Each unit cost is Rs 10. The company did well in the market as its performance rose by a huge margin and its stock value reached up to Rs 100. If Mr.X sold its 1000 shares at Rs 1,00,000. I.e (10,000/10=1000, Rs 1000*100=Rs 1,00,000) hence this stock gains ten times a return. Such stocks are considered as a ten-bagger stock.
As we said above, these stocks are cheaper than other stocks and hence you can easily do share trading and invest in them without taking any risk of losing huge amounts of your investment finances.
Therefore, if they fill a small portion of penny stocks into their portfolio, chances are investors creating room for better investment options while minimizing the risk associated with it.
As these stocks heavily depend on the market condition for the growth in their stock’s intrinsic value, they are associated with high risk.
Apart from the fundamental risks linked with the stock market, these stocks also come with other types of risks which can’t be neglected.
The companies that mostly issue penny stocks are startups. These companies freshly come into the stock market for fundraising and needless to say, there are a lot of insecurities associated with these stocks such as lack of information on the past performance, financial soundness, growth prospects of such stocks.
Therefore, it is suggested to do complete research before investing in penny stocks. Also, there are several stock market courses available on the internet. You can take a wide range of knowledge from there.
If you look at the financial history, you might have heard that penny stock scams are very common in the international stock market. One such popular method is pump and dump. Under the pump and dump method, investors with an intention of scamming, purchase a huge amount of penny stocks. Such hype attracts new investors to purchase these stocks.
Once the company realizes that they have enough buyers who have invested in their stocks, the speculator immediately reduces the value of these stocks resulting in the losses of new investors.
Apart from investing in penny stocks, investors nowadays seek out new investment options that are suited to their portfolio and risk appetite both.
Mutual funds are one of the best investment options investors are gaining interest in. Mutual funds are a professionally managed investment scheme that pools money from numerous investors and invests this money in securities such as stocks, bonds, and debts.
While penny stocks seem an attractive investment option for many investors because of their low pricing, they do carry risks like other equity shares. The price movement of such stocks heavily depends on the market condition which makes penny stocks highly risky. However, these risks can be mitigated if you do complete research about these stocks before investing.
Well, if you need the right investment advice regarding any stocks and mutual funds, you may consider Swastika as the best stock trading platform for beginners and experienced both. The stock broking company comes with user-friendly online trading platforms at affordable brokerage rates.
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