Share Market Basics for Beginners, Investment Tips and Tricks

Share market basics tips and tricks 2 Share Market Basics for Beginners, Investment Tips and TricksThe greater part of the people set back when it comes to investing in the stock markets. Be proud that you are among the few who stepped into action instead of those who dropped out at the very thought of investing. Investing in the stock markets is a better option to augment one’s wealth over the long term; still, the process could be stressful and complicated if you invest for the first time. 

Surprisingly investing has become more obtainable than before. Years before, you have to work with stockbrokers, who probably do not care about your best interest in the past years, and charge a lump sum as fees. On the contrary, any of us can start to invest with a minimum amount as we can easily access a wide range of information and advice on investing on the internet. This article discusses some of the time-proven tips and tricks that help you to become a better investor.

Getting to know the difference between a trader and an investor

Before diving deep into stock investments, it is inevitable to know the difference between an investor and a trader. An investor is a longstanding market participant and can hold on to their purchases for a couple of months and sometimes even for years. On the other hand, a trader is a person who may buy a stock and probably sell the same within minutes, hours, or days. It is essential to recognize the difference between these two positions to become either one of them. Hence the investing strategies cannot be applied by the traders, such as the trading strategies don’t work for the investors. Better settle with any one of these strategies because this is the very first step and the bedrock of your stock market business.

Understand the fundamentals of the stock market

Let’s assume that you have chosen a side, and your next step will be to learn the basics of the stock market. Try to learn the basics of the Indian stock market indices such as the Sensex, Nifty, and the Indian stock exchanges BSE and NSE. Get more knowledge on stocks, stockbrokers, how the market moves, stock market timings, etc., to understand the stock market better. 

Generally, most beginners skip educating themselves about this basic knowledge of the stock market, attempting to earn quick money. But it is not possible to build your investing strategy without being informed about the fundamentals. Investing your time in learning the stock market is inevitable before you invest your money, and with that knowledge, you will know what and what not to do with your trading account.

Choosing your stock broker

Choosing a stockbroker might be difficult for beginners, and there are several stock brokers in India. Selecting your stockbroker is one of the most crucial decisions to make at the beginning of your journey into the stock market. At the same time, deciding your stockbroker focus on factors such as the brokerage, trading software, and most importantly, their reputation in the field. Pay special attention to the brokerage because whether you flourish or lose in a trade, you have to pay the fee for the brokerage. Usually, the brokerages charge some percentage from the trade value or a flat fee. The brokerage of multiple trades adds up very quickly, so this is very important for the stock traders.

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Make use of the stop loss in every trade

Stop loss helps you reduce the losses by selecting a price that will automatically square off your position. You will find the stop-loss option in the order screen on the trading portal of your stockbroker. It is crucial to use stop-loss on all of the trades you do in your initial trading days. These days almost all the brokers let you put a stop-loss when you place the buy or sell order.

Understand the different types of orders in the stock market

Stockbrokers nowadays offer their investors different types of trade orders, as the investors couldn’t afford long hours in front of the screen when the market is live. Some of these trade types are Normal, Stop loss (SL), Margin Intraday Square up (MIS), Limit Order (LO), Bracket Order (BO), and Cover Order (CO). Understand how these different types of orders work for you to become a knowledgeable trader. If you are investing in stocks with little funds, you can follow Normal and Stop-loss orders.

Avoid placing sell orders in the initial days

Opposite of placing a buy order is known to be Short-selling. You indeed can profit in the stock market, even when the price of the stocks is falling steep. The process is simple; first, you have to buy the shares at a specific price and then sell the same at a higher price. The difference in price multiplied by the number of shares you purchased will become your profit. 

When it comes to short-selling, first, you place a sell order at a specified price and buy the same at a lower price. Your profit will be the difference in price multiplied by the number of shares sold. Make sure you master the buy-and-sell order before you start experimenting with the sell-and-buy orders.

Remember, in the stock markets, there is no easy money. It is not wise to step into the market with such beliefs. What you need is tremendous knowledge, dedication, discipline, ample time, and a lot of patience.

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