Investing in the share market is one of the excellent ways to build a corpus in the long run. But, you need to have the right knowledge to tap the market movements and gain lucrative returns. If you want to learn about it, start with basics. This article will help you understand the requirements of and show you how to trade in the stock market.
First things first, you need to have a Demat account. You cannot invest in the share market without a Demat account. A Demat is quite similar to a bank account in which you hold deposits and the record of balances are maintained in a bank passbook. Likewise, when you buy or sell shares, they are credited/debited to/from your Demat account.
A Demat holds all your shares in your name. You will regularly receive Demat statements that will show information on the shares bought & sold. This account holds certificates of various investments such as mutual funds, equity shares, ETFs, and bonds in an electronic format.
Before you start trading or investing in the share market, understand your investment purpose, risk appetite, and limitations. Add up all your income and deduct all your expenses, and then, dedicate the remaining amount to your investments. Remember that stock market investments are associated with some amount of risk. So, you should be willing to take a certain amount of risk.
Once you determine your investment amount, analyse the stock market scenario and frame an appropriate investment strategy. Look for stocks that suit your needs. For instance, if you are looking for an additional source of income, investing in dividend paying stocks can be a good choice. If your focus is to build long-term capital, look for growth stocks.
If you are a newbie, start investing small amounts. Increase the amount gradually, as per your experience and earnings.
Read more: 5 Mistakes to avoid when trading in Equity
Generally, buy low and sell high is the mantra for trading in the stock market. So, it's important to make your investments at the right time. For that, you need thorough research and a grasp on market movements to strike gold at the right time.
Once you have your research and strategy in place, you can begin your investments. You can execute your trades either via the online or offline modes. You can even place an order on the telephone, but make sure that your broker understands the order correctly.
It is one of the important parts of trading. The stock exchange is dynamic in nature. It constantly changes as per market conditions. Make sure that you track your investment regularly exit at the right time. However, don’t panic and sell in haste if your stock is not performing well. Be patient and wait for the market to turn and for your stock perform well.
Start investing today!- The younger the better
Do a complete research about the company before you buy its stock
Diversify your investment. Never invest in just one asset
Don’t blindly believe in rumours
Be patient and not greedy
Take expert’s help whenever needed
Keep educating yourself
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