A share market, equity market or stock market is the aggregation of investors; buyers and sellers. They represent ownership claims on businesses; depending on short or long term involvement with the companies. This include securities listed for government bonds and public stock company having minor or major shares of private investors. Individuals can easily open a demat account and start trading in couple of minutes. However, there are few things you must know before trading in stock market.
Consider two scenarios
Scenario 1: An investor says “I bought ABC Company at ₹ 2500 and immediately after I bought the stock price dropped to ₹ 1800.” I feel disappointed.
Scenario 2: Another investor comes with an experience “I sold YYY Company at ₹ 2000 and it went up to ₹ 2200 same day. I made a loss of almost Rs.400 per share, I should have sold it next day.”
In both the scenarios investor lacks research and knowledge of potential value of the company. The past history and performance of the stock is important deciding factor in future fluctuations.
The golden rule is to first do your own analysis of the stock before investing and buying on tips. Start with safe investments, invest only in companies declaring dividends every year. This ensure that you are investing in a company whose fundamentals are strong and have serious concern for its investors. Analyse performance of loss making companies to know what made them incur losses.
For beginners, it is advised to start as a part time trader. Stock trading has numerous benefits as a viable part time occupation. It is decision of the time that matters in the stock market. The stock market doesn’t care about your level of success, education, ethnic origin or any personal characteristics. Complex employers, office politics or difficult employees do not play a part in trading. Additionally, you have the freedom to trade from any location. If you follow a few simple rules you can run your business on your own terms.
The most important factor is to be clear about why you want to trade stocks. What do you hope to gain financially from learning to trade?
Are you looking to?
- Create an enhanced lifestyle with supplemental income?
- Replace a full time income with a passive income stream?
- Become independently wealthy by creating a financial base independent of other income sources?
What would be a successful trader mean you? Imagine yourself making successful trades and gaining financially. Think about what it would feel like to have extra money in your bank account and to achieve your targets. With a clear picture of what you want and how that would feel you will be able to remain focused and motivated.
Your first task is to put one primary goal for your trading plan in writing. Additional goals you set can then support your primary plan.
What are your limitations and strengths?
As well as learning to trade stocks it is essential that you understand how react under stress. Being aware of your own behaviour patterns and common causes of and reactions to stress when trading will help you to master stock trading.
The reason that many people lose money in the stock market is because they lack the proper knowledge base. Independent of trading styles there is one thing common to all successful traders; the use of a tested and proven system.
In learning to trade, you must be willing to let go of pre-formulated ideas and start fresh, develop new successful habits, and the discipline necessary to trade successfully over time.
Are you taking a plunge in Stock Trading career?
Stock market trading stops many people because they don’t have contact with an experienced, successful trader or trading system that actually works. Going it alone by reading few blogs and newsletters can be potentially expensive. Trial and error learning in stock market means losses of huge amounts of money. Invest in a share trading education, attend few paid seminars and take advantage of the insights and experiences of successful traders. No one can stop you from making a successful career in stock market if you learn trading from experts in the industry.
You must download free trade learning app to know fundamentals of share market.