What do you mean by trading on equity?online equity trading

Trading on equity is buying and selling of company stock shares with the motive of investing them at higher rate of interest. The shares of different publicly traded companies are traded through stock exchange or through over the counter markets. Stock market is the core of economy as it ropes in necessary capital required by the companies on one hand and on the other it enables the investors to enjoy a slice of ownership in companies with the prospective of availing gains in the form of dividends in tandem with the companys future performance.

Trading on equity is done on two markets viz. The primary markets wherein new issues are first offered and secondary markets wherein subsequent trading takes place. It in fact means to raise fixed cost capital which is the mix of borrowed capital and preference share capital keeping equity share capital as the base to facilitate increase in income of equity shareholders. It is the situation when the company incurs new debts to acquire assets which enable the company to earn greater amount of return as compared to the cost of interest of the debt.

Trading on equity has two paramount benefits.Increased earnings: As it allows an entity to earn a disproportionate amount on its assets.Favourable tax treatment: Interest expense is tax deductible which results in reduction of net cost of the borrower This process has the capacity of earning outsized returns for shareholders but it also carries in its orbit the risk of outright bankruptcy in case cash flow falls short as expected. This also is known by the terms financial leverage, investment leverage or operational leverage.

In nut shell trading on equity is the medium where in entity uses bonds, other debts and preferred stock to enhance its earnings on common stock. The earnings that are more than interest expense on new debt will thereby increase the earnings of the entitys common stockholders. This increase is the clear cut indicator that the entity has attained success in trading on equity.If you own a computer and are computer literate then you can always go for online equity trading. It is medium of trading in securities online. This method has overwhelming advantage as it is fast, very simple and efficient mode of trading. This mode gives you full control of whatever actions you have taken.

Online equity trading does away with the unwanted muddle of time consumption, difficulty of going to another place to do trading and handling lot of paper certificates. As with this mode and Internet access you can deal in securities even in non market hours, it makes your transaction paperless and consumes less time.Online equity trading facilitates easy access your account from anywhere be it your home, office or any other place suitable to you. This is the easiest and best suited option for NRIs to invest in Indian markets. Above all Internet is the hub of information and one can easily access information online through sites that are dealing with securities.

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