The share market has become one of the most popular investment platforms in India. In fact, the investor or trader can make huge returns from the share market. Therefore, it is very important for the investor to know the share market basics. In this article, we shall learn how to trade stocks for beginners.
Before going ahead, let us understand the meaning of Stock Trading.
What is Stock Trading?
Stock trading is buying and selling the shares in the secondary market on a single day. To put it another way, when an investor purchases a stock and sells it on the same day, it is stock trading. The trader in such case will book either profit or loss at the end of the day in the stock market. Now we shall take a systematic look at the stock trading basics for the beginners.
How to Trade In Stock Market for Beginners in India?
1. Open a Demat Account
The primary step for share market trading for beginners is to open a Demat Account. A Demat account is like a bank account that holds the shares and securities of the investors in the stock market. In fact, any trader or investor who wants to deal in shares and securities need to open a Demat account.
2. Understand Stock Quotes
The next step for beginners while trading in stock market is to understand the stock quotes. Stock quotes are not just numbers but reflect much more than that. In fact, it is very important for the beginners to understand the prices movement of stock on the basis of any news, fundamentals, technical, etc. This will enhance their understanding of a stock price and they will know the right price to enter or exit.
3. Learn About Bid and Ask Price
The bid and ask price determines the price of the stock in the share market. The beginners in the stock market must know about the basis of the bid and ask price. The bid price is the price at which a trader will be able to sell his stock. On the other hand, ask price is the price at which the trader will be able to purchase any stock. Therefore, the beginners can put their buy and sell orders on the basis of the bid and ask price.
4. Fundamental and Technical of Stock
The fundamental and technical of a stock are important criteria before investing in any stock. The beginners in the stock market must look at the fundamentals of profitability of the company, past performance, important ratios before investing. The technical analysis of a stock is important for traders.
5. Learn Putting Stock Orders
The beginners in the stock market must learn to put the stock orders. To put it another way, the beginners must know how to put the buy or sell orders. As we know that, everyone uses the internet these days. In fact, more and more investors opt for online trading service. Therefore, it is essential for any beginner to learn to put a stock order in the share market.
6. Learn the Importance of Stop Loss
The stock market trading for beginners can go terribly wrong if they do not understand the importance of putting a stop loss. Stop loss is put while executing a stock order. Stop loss protects the trader from suffering heavy loss and limits the loss to a minimum. In fact, trading without putting a right stop loss can be fatal. The trader can lose much of his capital if he is not putting the stop loss.
7. Trail Stop Loss
The share trading for beginners is new. Therefore, it becomes important that they learn how to protect their profits. One way to protect the stock profits is to put a trailing stop loss. Trailing stop loss is put when the trader is already earning profits. With trailing stop loss in place the stock shall be sold if it falls to a certain price. However, the trader shall continue to make profits on it. In addition, trailing stop loss helps in not only protecting the profits but also protects the capital erosion in case the stock price falls drastically in a quick time.
8. Take Advice or Consult
A stock market is an unpredictable place. In fact, no one can predict the right move in the stock price. However, what a trader can do is to take the right advice or take consultancy service from a knowledgeable person. This shall help the beginners in the stock markets to carry out right trades. In addition, this will also protect the beginners from falling into the trap of bad quality stocks or taking a position on the basis of rumors or false news.
9. Avoid Bad Quality Stocks
One golden rule for stock market trading for beginners is to avoid the bad quality stocks. The company’s stock that has a bad management, fraud allegations or any wrongdoing associated with them must be avoided for any trade. However, such stocks show very volatile moves which are perfect for trade but the beginners can easily be trapped in such stock. In fact, the best policy for the traders is to trade in good quality stocks.
The above points shall help in share trading for beginners. By following the above points, the beginners can learn how to trade in the stock market. If you are looking for How to Trade in Stock Market in India then your search ends here now!