If you are a beginner who wants to trade in the stock market, then you are at the right place to be because in this blog you will get to know what is the stock market, what is a stock exchange, how to trade in stock market and what process you need to follow for it.
Stock trading is of two types – Active Trading and Day Trading. An investor who makes 10 or more trades each month is considered active. They usually employ a methodology that significantly depends on market timing, attempting to profit from short-term events in the following weeks or months. On the other hand, day trading is a practice used by traders who play hot potato with stocks, purchasing, selling, and closing their positions in the same company on the same trading day, with little regard for the underlying firms’ inner workings. The goal of a day trader is to profit from daily price movements in the next few minutes, hours, or days.
What is the Stock Market?
Stock market is a platform where publicly listed corporations’ shares are traded. Stocks, also known as “Shares”, represent fractional ownership in a corporation, and the stock market is a marketplace for investors to buy and sell such investable assets.
What is a Stock Exchange?
A stock exchange is a marketplace for stockbrokers and investors where securities such as stocks, bonds, and other financial instruments are bought and sold. The Bombay Stock Exchange and the National Stock Exchange are India’s most prominent stock exchanges.
Basic Steps to know How to Trade in the Stock Market
These are the basic steps that you need to follow that will help you in knowing how to trade in the stock market:
Open a Trading and Demat Account
The first step is to find a good stockbroker and open a trading and demat account. A trading account allows you to make buying and selling orders in the stock market, while a demat account allows you to store your stock purchases in a digital format.
A Market Crash Course
Go through financial articles, stock market books, website tutorials or you can also do some online courses. This will help you in understanding things better. It’s crucial not to get too hung up on one facet of the trading. Rather, research all there is to know about the market, including ideas and notions you don’t think are very important right now. Also, follow the market everyday
Learn to Analyze
To plan your trading, analyze the stock’s fundamental and technical evaluations. Fundamental analysis is a method of determining a security’s intrinsic value. It takes into account a variety of factors such as profits, expenses, assets, etc. Technical analysis, on the other hand, analyzes the stock based on its past price and volume chart in order to forecast its future potential.
After analyzing the stocks and market trends, you can start trading. There’s nothing quite like getting hands-on, low-pressure experience, which so many online stock brokers provide through virtual trading tools.
Benefits of Investing in Stock Market
With the advancement of technology, investing has become considerably easier; presently, buying and selling stocks is as simple as clicking a button. Now anyone can invest in the stock market and reap all of the rewards that come with it. Some of the major benefits of investing in stock market are listed below:
- The most important aspect of investing directly in the stock markets is the market’s potential to deliver the kinds of gains it does. Investing in companies with a consistent growth pattern or in industries that contribute to the nation’s economic development, will result in you steadily developing your wealth and boosting the value of your investment over time.
- The stock market makes it simple to purchase company equity. You can buy them via a broker or online within seconds after creating an account.
- You can sell your stock on the stock market at any moment. Economists use the term “liquid” to describe the ability to convert your shares into cash rapidly and with low transaction costs. This is crucial if you unexpectedly want funds.
- In every country stock market is governed by a regulatory organization . This body is known as SEBI in India. The market operates within its principles, and regulatory agencies monitor stock exchanges, market transparency, and investor rights. Hence, when an investor participates in the stock market, these regulating organizations protect not just his money but also his rights. This protects them from any fraudulent behavior by the company in which they have invested.