The stock market is a path that provides you with a bundle of opportunities for wealth creation. This is because the share market has the potential to book more profit with a minimum investment amount. However, it is filled with volatility as there are lots of ups and downs. Therefore, it is important to learn the tactics of the stock market before you begin trading.
What is Stock Trading
Stock trading refers to the buying and selling of shares in the secondary market on the very same day. Hence, it is equally important to get a detailed insight into primary and secondary markets.
Now, let’s get acquainted with the primary and secondary markets:
Primary Market:
Primary market refers to the market where securities are firstly created and issued. Therefore, the transaction is done between issuers and buyers.
Secondary Market:
In the secondary market, you can buy and sell shares that are already issued in the primary market. In the secondary market, the transaction takes place between buyer and seller. Here, the stock broker acts as an intermediary.
Here, the share trading can be done in multiple ways:
If you buy and sell shares on the same day, the trade that takes place is known as intraday trading. At the end of the day, the trader books either a profit or loss within the same day.
How to Do Stock Trading for Beginners
The following points will help you to get started in stock trading:
- Open a Demat Account
If you want to start trading in the stock market, you are required to open demat account with the top stockbroker, as without a Demat account, you cannot trade in the stock market.
The Demat account looks similar to a bank account where you can hold money to use for trading.
The securities you buy are maintained electronically in the Demat account.
- Understand Stock Quotes
A stock’s price is decided on the basis of fundamental analysis, technical analysis and so on. By gaining adequate knowledge about stock market trading, you can improve your knowledge about the stock market and stocks. This will help you to get an idea about the entrance and exit timings of a stock market.
- Bids and Asks
Bidding refers to the maximum price, you need to pay if you want to buy a particular stock. The asking price is the opposite. It refers to the selling price of a seller willing to sell the stock. In order to ensure a profitable trade, it is important to settle at the correct bid and ask price.
- Fundamental and Technical Analysis of a Stock
If you want to know the performance of a stock, such as the stock's history, and to predict its future value, do fundamental and technical analysis of a stock. Fundamental analysis helps to evaluate securities by attempting to measure their intrinsic value. It involves several dynamics such as assets, expenses, liabilities.
In technical analysis, traders look to statistical trends in the stock’s price and volume.
- Try to Learn the Stop-Loss
Volatility is an integral part of the stock market. Hence it is crucial for a beginner so that you learn to prevent heavy stop-loss. While executing a trade, you need to set a price of stop loss to reduce the losses. In case, if you fail to put a stop-loss at a particular time, chances are it may heavily damage your capital.
- Start with Safer Stocks
A huge capital loss at the beginning may bring your confidence down. A wise choice is to start with the safer stocks who are having less volatility. This might not give you a good return in the beginning but these stocks are likely to give a good performance even in adverse conditions.
