If you know the basic knowledge about the share market ,then you can earn money .

In the sharemarket you can earn money through 2-ways.

• Full time work as Trader.
• Part Time as an Investor.

TRADER.

Trader is the person who does trading means buying and selling the share in the stock market. If you want to make trading as a profession or regular income just like a job,then you have to do full time work.

There are many options to trade in the share market and make money.

• Intraday Trading
• Swing Trading
• Short Term Trading
• Long Term Trading
• Option Trading
• Future Trading
• Short Selling

Others Income apart from share value..

• Dividend
• Bonus

Intraday Trading.

The buying and selling of shares on the same day is called intraday trading. When the market opens, buy the share and before the market closes sell the share.

The market opening time is 9:15 AM and closing time is 3:30 PM.

For intraday trading required full time work, you can not generate profit through part time.

Note:

1. Intraday trading is not permissible in islam.
2. Broker form by giving money for one day to trade.

Swing Trading.

The type of trade which is completed within a few days,weeks and months .

In this trade you buy the share ,keep it for a few days,weeks or few months and wait for profit.

Note.

Swing Trading is permissible in islam.

Short Term Trading:

The type of trade which is completed within 2-5 years is called short trading.

If you buy the stocks ,keep it for 2-5 years to make profit .

Note.

Short term trading is permissible in islam.

Long Term Trading:

The type of trading which is completed for more than 5 years.

In this case you buy the share and keep it for the long term to generate wealth. Many top investors in the world create wealth through long term trading. You can generate passive income through long term investing.

Note.

Short term trading is permissible in islam.

Option Trading.

Option trading is a contract that allows an investor to buy or sell an underlying instrument like a share, ETF or even index at a predetermined price over a certain period of time. Buying and selling options is done on the options market, which trades contracts based on securities.

Buying an option that allows you to buy shares at a later time is called a “call option,” whereas buying an option that allows you to sell shares at a later time is called a “put option.”

Option trading is less risky because they give less return as compared to equity.

Note – Option trading is not permissible in Islam.

Because options are not the same as stocks because they do not represent ownership in a company.

Future Trading:

Stock Future contract is an agreement to buy or sell a specified quantity of underlying equity shares for a future date at a price agreed upon between the buyer and seller. The contracts have standardized specifications like market lot, expiry day, unit of price quotation, tick size and method of settlement.

Note.

Future trading is not permissible in Islam.

Short Selling.

it is very interesting to understand the process of short selling, because in this concept shares are sold first and bought later, and the reduction in stock price can also make profit.

In general trading we buy first and after sometime sell to book profit. But in case of short selling ,it is sold first and later brought to book the profit or loss.

Note.

Short selling trading is not permissible in islam .because there is no ownership position at the time of selling.

Dividend:

Dividend is a part of a company’s NET PROFIT  given by a company to its shareholder.

After making tax and all other types of ADJUSTMENT, the some percentage of NET PROFIT is distributed equally among the shareholder of the company, and the person who holds the shares, Gets the benefit of dividend in the same proportion,

There are two types of Dividend.

1. INTERIM DIVIDEND – When a company announces a quarterly dividend within the financial year, it is called interim dividend.
2. FINAL DIVIDEND – When the company announces Annual Dividend at the end of the Financial Year, it is called final dividend.

Note. Dividend is permissible in Islam.

Bonus:

A bonus share is an additional share paid absolutely free to the company’s current shareholders.

For  an example, you have purchased 100 shares of the company infosys, and the company announces the issuance of bonus shares in the ratio of 1: 1 (1 bonus for 1 share)

So in this case, you will get 200 shares extra because 100 free shares will be given by the company.

Bonus share always issues in ratio such as 1:1,2:1, 3:1.

Note.

By issuing bonus shares, the “number of shares” increases with the investor, but does not increase the “amount of investment”

I hope you will understand how to make money in the share market, after reading this post.

All the best for your investment journey.

Jazakallah Khair.