A stock market is a marketplace where the shares or stocks of the listed companies are traded along with other financial securities like mutual funds, corporate bonds, government bonds, exchange-traded funds, etc. Stock trading refers to the buying and selling of a company’s shares at ongoing prices in the market.
Stock market trading or stock trading focuses on short-term profits. It is a risky investment option but ensures maximum gain in minimum duration. If you are planning to allocate some percentage of your funds to stock market trading you are advised to learn the basics about the market. This may ensure fair knowledge at your end and you will be able to manage risky market conditions decently.
If you are planning to start trading in the stock market you may start with the small capital initially and as per the growing experience raise the stakes higher. One may try to invest in a diversified kind of securities ranging from lower returns to higher returns as per the individual’s risk appetite. Let’s understand how to start share trading. The steps are mentioned below:
How to open a Demat and trading account:
To initiate the trading process a demat account and a trading account are necessary. However, to keep the stocks in electronic form, only a Demat account is required. Free demat account opening is provided by most of the stockbrokers. One can open both accounts with any reputed stock broker registered with NSDL and CDSL.
Allocate a fixed percentage of your portfolio to stock trading:
If you are new to stock market trading or an experienced professional you may decide on a fixed percentage of funds to use for trading purposes. Higher investment of funds in the stock market will expose your funds to market volatilities.
Start using market orders and limit orders:
When you have a trading account and a Demat account, be aware of funds to be allocated in the stock market. The next step is to start trading on the stockbrokers’ website or mobile application. The two common types of trading strategies are:
- Market Order:
The process to buy or sell shares of stock at the current best available price.
- Limit order:
The process to buy the shares or stocks at a specific higher price (maximum that you may pay), while in terms of selling the share when it reached a pre-decided lower price and you will not be able to bear any further losses
Take a calculated decision:
Always try to measure the risk associated with particular trade or investment. This may give you a clear perspective about your goals and why are you investing your funds in particular share or investment options.
Now, when you are aware of the steps to start trading in the market. The next important thing is how to survive in stock market trading. Few things are mentioned below that one may keep in mind while trading in the share market.
Try to lower the risk:
You can try lowering your risk by testing the market positions initially. The market positions will help you to survive the market volatilities
Try to read and understand:
One may try to learn few market strategies and technical analysis. One may also keep a track of market scenarios by reading good market news. However, the news may not be your sole guidance to stock market investments.
Plan and formulate strategies:
It will be good if you do not follow the market tips from other’s perspectives. Try to build your own plan and strategies in place and work according to them. Try to make necessary adjustments if you are confident that you will be able to utilize the market volatilities in your favor.
Stock market trading is an innovative method to generate decent earnings but one may know well that a perspective and a plan will give a better foundation to your stock market trading plans.