Trading in stocks is now as simple as recharging your phone or sending money through the internet. A computer with an internet connection and a bank account with money in it are the only requirements. Those who are new to trading may feel overwhelmed by the large number of trading platforms and tools that are accessible online. When you first begin trading stocks on the internet, you may not know where to begin. To help you get started in the stock market, we've put up a list of basic steps that you may follow in this blog article.
Learn everything you can about trading.
Losing money isn't usually the result of bad luck. It is frequently due to a lack of knowledge on your part. Becoming familiar with the stock market and online trading techniques is essential before beginning your investment journey. On the internet, you will find tons of resources that will educate you on how to trade online with the assistance of an online broker.
You need to know the basics of stock market investing before you can begin to make money in it. Find out what the BSE, NSE, and Sensex/Nifty are all about, and how they relate to one another. To gain a basic understanding of the market, it is advisable to familiarize yourself with such topics as what stocks are, when the stock market opens and closes, and what a stockbroker does.
Some basic stock market terms:
1. Stock Broker:
Most consumers can't just walk into a stock exchange and purchase or sell stocks. You need a stockbroker. A broker is a member of the stock exchange who acts as an intermediary between buyers and sellers. Registration with the Securities and Exchange Board of India (SEBI) is mandatory for every broker. Maitra Commodities is one of the fastest growing brokers in India.
Maitra Commodities began with commodities trading as its main service to its clients. It has now expanded to include the trading and distribution of stocks and mutual funds as part of the overall service offering. The development of next-generation trading features for our clients is a top priority for us right now.
2. Stock exchange:
A stock exchange is a place where people can buy and sell financial securities that are issued by companies, like stocks and bonds. They are an integral part of the capital market ecosystem as a whole.
NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) are two of India's stock exchanges. NSE is India's largest stock exchange, whereas BSE is Asia's oldest.
3. Stock market index:
A stock market index captures the market's real-time movement. A stock market index is made by grouping together stocks that are similar.
For the Bombay Stock Exchange, the Sensex (Stock Exchange Sensitive Index) is the stock market index. The Sensex is a composite index of 30 of the most liquid and actively traded equities on the BSE.
Nifty stands for 'National Stock Exchange Fifty' and is the index of the National Stock Exchange. Index of 50 largest Indian firms listed on the NSE, NIFTY 50 is a benchmark for the Indian stock market.
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Trader vs. Investor
To begin with, it's important to distinguish between traders and investors. A trader is somebody who buys stocks and then sells those stocks within minutes, hours, or days of making the purchase. Unlike investors, who can hold onto their purchases for many months or even years, they are more of a long-term player in the market.
A good place to start is by figuring out how much money you have to invest and how much you can afford to lose without feeling stressed. You might lose everything if you don't have this mindset in mind when investing. The amount of money you can invest and the amount of money you can afford to lose should be part of your plan for every investment decision.
To be successful, you must be able to distinguish between the two types of people and be crystal clear about what you want to accomplish in business. The reason is that trading strategies don't work for investors and investing strategies don't work for traders. At the beginning itself, choose a side because this will serve as the basis of your stock market experience.
Investing in the stock market involves the following requirements:
- Saving Account: To trade on the stock market, you require a savings account. Your savings account might be in any Indian bank, private or public.
- Demat Account: A demat account allows investors to buy, hold, and sell shares electronically. To trade in shares, you need a demat account, according to the SEBI regulations. Your stocks and other equity-related assets are held in a demat account, just like your money is held in a bank account. Investing in stocks using a demat account is secure, simple, and time-saving.
- Trading Account: Stock market transactions are conducted through a trading account. To trade in shares, you need a trading account, which has a unique trading number. It connects your bank and demat accounts, allowing you to trade stocks.
Trade and demat accounts vary in that trading accounts provides you the interface to buy and sell stocks through the exchanges, while a demat account maintains the stock and securities in digital format. To begin trading stocks, you'll need a bank account, a demat account, and a trading account. A debit is made from your savings account when you use a trading account to acquire shares. The shares are then placed in your demat account.
How to open demat and trading account?
You can open both demat and trading account with Maitra Commodities. It is an easy process. You must submit the required application form along with all the necessary supporting documentation for fulfilling the KYC norms.
The term "Know Your Customer" refers to the process of determining a customer's identification as well as personal information like their income and occupation. It is necessary to complete a Know Your Customer (KYC) form in order to create a trading or demat account, according to SEBI regulations. During the account opening process, your Know Your Customer (KYC) information will be verified.
- Visit the “Open An Account” page at the Maitra Commodities website.
- Fill in your name, phone number, PAN number, and other personal information.
- Upload your KYC documents such as your PAN card, picture, signature, proof of address, and a cancelled check.
- Verify your identification by doing an in-person video verification.
- Using an Aadhar-linked phone number, e-sign the documents online.
- Submit the application after a final review.
- After your account has been verified and activated, you will be sent the login information, as well as the details about your demat and trading accounts.
With this online trading account, you may begin trading from the comfort of your own home.
How to choose a stock?
Most beginners, in their quest to make fast money, neglect to learn the basics of the business. If you are not familiar with the basics, it will be impossible for you to develop your own trading or investment techniques. If you want to learn how to trade, you should spend at least a few days learning the basics.
A stock's price fluctuates based on news, fundamentals, and technical analysis. It is possible to improve your understanding of stocks and the markets by learning more about these factors.
Starting with publicly available information such as financial reports, SEBI filings, and research reports from expert analysts, you may narrow down your list of potential stock investments further. Additionally, you may obtain all of this information from your brokerage firm. This will assist you when determining the right price to begin or end a transaction.
Beginners are advised to keep an eye on the stock for at least a month before making a trade. With a small sum of cash, you may get your feet wet in the stock market by purchasing a few shares.
How to Make Your First Trade in the Stock Market
As soon as you're ready to make your first trade, log into your brokerage account and transfer funds from your bank account to your brokerage account. In most cases, brokerage firms will deposit the funds into your trading account instantly.
Pick the stock you have chosen, select an order type, and then submit the order. Following the placement of the order, keep an eye out to see that it is executed.
- If you're utilizing market orders, the transaction should take place instantly.
- If you are utilizing limit orders, it is possible that your order will not be executed immediately. If you want a trade to happen more quickly, move it closer to the ask price (if you want to buy) or the bid price (if you want to sell).
Always put a stop loss on your trades.
Your stockbroker's trading site will provide a stop-loss option, which you may access by going to the order screen. A stop-loss allows you to limit your losses by automatically closing your trade at a certain price. In the case of ICICI Bank, for example, if you are acquiring 100 shares at Rs. 700 and anticipate that the price will climb, you might set a stop loss at Rs. 690.
If the stock price decreases, your 100 shares will be immediately squared off when it hits Rs. 690. Using stop-loss orders on all of your transactions is critical if you want to learn how to invest successfully in the stock market, especially during your first few days of trading. When you place a buy or sell order, most brokers enable you to put in a stop loss at the same time.
What sort of trading is most suitable for those who are just starting out?
As a new trader, following the trend is probably the easiest way to make money. This is based on the idea that "the trend is your friend." As a beginner, it may be hard to use contrarian investing tactics like going short when the market is going up or buying when it is going down.
Avoid utilising the margin facility in the beginning.
One of the most common issues for stock market traders is money. Stockbrokers have come up with a solution to this problem: the margin facility. With a broker, you could be able to get a 2x margin on your capital. In other words, even if you have a trading capital of Rs. 1 lakh, you may still buy shares worth Rs. 5 lakh in the stock market.
But, margin trades must be closed before the market closes the same day. Experienced traders may benefit from using the margin facility, but beginners should avoid it because it can result in massive losses. Until you've gained some experience, you should only trade with the money you have.
Have an exit strategy in place.
An exit strategy is always a smart idea. There are two ways to get out of the stocks or shares you hold: either by booking a profit or by incurring a loss. The majority of the time, there are just four circumstances in which you should consider selling a great stock from your portfolio:
- As soon as you have achieved your investing objectives,
- When the fundamentals of the stock have changed,
- In the event that you discover a more beneficial investing option,
- When you are in desperate need of money,
What is the best way to make money with online stock trading?
Profiting through stock trading is governed by the same set of principles as any other means of earning money. You must be able to analyze stock movements, calculate taxes and expenditures, apply smart order types, and take the risks associated with the trade. Online trading is handy, but it does not imply that it is simple.
Controlling one's emotions and exercising patience
You must strike a balance between your own greed and your own fear to make money in the stock market. It's possible that some of your plans won't work out and you'll end up losing money. When faced with such challenges, you should avoid becoming impatient or losing faith in the strategies. One must be patient and stick to the plans that have been set up in order to be successful. To be successful in the stock market, it's important to keep your emotions in check.
We hope that reading this article has given you a bit more confidence in your decision to begin trading equities online. We know that building a successful portfolio takes time, but we are sure that if you follow our suggestions, you will be well on your way to being a top trader in no time.