Summary of "PSX Complete Course | Price Movement, Price Types, Limit, Market and Stop Loss Order | Class 3"
Summary of Financial Strategies, Market Analyses, and Business Trends from the Video:
1. Overview of Pakistan Stock Exchange (PSX) and Company Types:
- PSX trades shares of public listed companies only (over 500 companies).
- Private limited companies operate but their shares are not traded publicly.
- The key difference between private and public companies is ownership: public companies offer shares to the general public.
2. Primary Market vs. Secondary Market:
- Primary Market: Where companies issue shares for the first time through an Initial Public Offering (IPO). Investors buy shares directly from the company, no broker involvement is required, but a CDC (Central Depository Company) account is necessary.
- Secondary Market: Where shares are traded among investors on the PSX through brokers after IPO listing. This market involves continuous trading of shares.
3. Price Movement and Types of Prices:
- Share prices fluctuate based on demand and supply.
- Three key price types in PSX:
- Bid Price: The price buyers are willing to pay.
- Ask Price: The price sellers are asking for.
- Last Traded Price (LTP): The price at which the last transaction occurred.
- Price movements can be volatile, influenced by market conditions similar to other commodities (e.g., tomato prices affected by seasonality).
4. Order Types Explained:
- Limit Order:
- Buyer or seller sets a specific price limit.
- The order executes only if the market price meets the limit.
- Example: Seller wants at least Rs. 45,000 for a laptop; waits until a buyer offers that price.
- Market Order:
- Buyer or seller agrees to execute the order at the best available market price immediately.
- No price limit is set.
- Example: Seller accepts the highest current bid price in the market.
- Stop Loss Order:
- Designed to limit potential losses.
- Automatically sells shares when the price falls to a predetermined level.
- Two types:
- Normal Stop Loss Order: When price hits the stop loss, the order becomes a market order and sells at the best available price.
- Stop Loss Limit Order: When the stop price is triggered, the order becomes a Limit Order with a set minimum selling price, possibly not executing if the price falls below the limit.
5. Practical Examples and Market Dynamics:
- Price determination is based on supply and demand.
- Order execution depends on market participants’ bids and asks.
- Risk management is crucial; stop loss orders help protect investors from significant losses.
6. Additional Notes:
- Trading requires a broker account in the secondary market.
- CDC account is necessary for holding shares.
- The session encourages feedback and suggests future topics like mutual funds, commodities, and forex based on audience interest.
Methodology / Step-by-Step Guides Shared:
- Understanding IPO and Market Types:
- Placing Limit Orders:
- Decide minimum (for selling) or maximum (for buying) acceptable price.
- Place order with this price limit.
- Order executes only if market price meets the limit.
- Placing Market Orders:
- Place order without price limit.
- Order executes immediately at best available price.
- Using Stop Loss Orders:
- Set a stop price to limit loss.
- When price hits stop price, shares sell automatically.
- Choose between normal stop loss (market order on trigger) or stop loss limit (Limit Order on trigger).
Presenters / Sources:
- The session is conducted by an instructor (name not provided) offering a free training program on Pakistan Stock Exchange trading fundamentals.
- Examples and explanations are based on PSX data and practical scenarios.
Category
Business and Finance
