The share markets can bring you enormous profits. In fact, it offers investors the most lucrative investment opportunities. As exciting as it sounds, we can’t deny the fact that the share market is highly volatile. The ups and downs are quite common in this industry. Before you get started, you need to learn about the basics of the share market. You can trade the shares in two ways.
One, you could purchase the shares directly from the issuers. Basically, the companies put their shares in the stock exchanges and offer them to the public. Then, there is the secondary market. In the secondary market, you don’t purchase the shares from the stock exchanges. It rather involves the interaction of the buyers and sellers. Let’s take a look at the complete process of stock trading:
1. Set up Your Demat Account
Just registering an account on an online trading and investment platform will not do. You are supposed to link your trading account to the Demat account to process the share transactions. It is important for the investors to set up a Demat account or a broker account to get started with stock trading. Just like how the bank holds your money, the Demat account is used to hold the securities you own. You could sell your securities from the Demat account. The shares are held by the Demat account until you sell them to another buyer.
2. Understand the Share Market
As mentioned before, a proper understanding of the share market is extremely important for the investor. You can’t just buy shares from a random company. You need to research the company, understand the fundamentals of the market, and know about the price fluctuations. A brief idea of the working of the market will help improve your knowledge. You may also need to conduct a technical analysis to determine future price movements. Based on these insights, you can make informed decisions regarding share investments.
3. Decide the Number of Shares You Want to Purchase
Companies sell thousands of shares to the public. Now, each investor has a different budget. With that being said, you need to plan your budget first. For example, if you have a budget of INR 10,000 for stock investment, then you can purchase 10 shares of a company each worth INR 1000. You also need to take other factors and expenses into consideration, such as broker fees. Once you have decided on your budget, you can place an order for the shares you would like to purchase on the stock investment platform.
4. Know When to Stop the Losses
Volatility is a sad reality in the stock market. There is no way a company can guarantee you the best returns on your investment. Even if they do, they won’t be able to offer you much. The share market is all about the risk. The higher your risk appetite is, the more returns you can generate. So, it all comes down to the risk you are willing to bear. However, this doesn’t mean you should invest all your savings for the sake of high returns.
The stop loss function can help prevent losses. The last thing you want is to end up losing all your savings just because you couldn’t control your losses.
5. Discuss it with an Expert about share market
Consulting an experienced financial investor is a good idea for beginners. After all, the share market experiences a lot of fluctuations on a daily basis. You must talk to a professional financial advisor to set your long-term investment goals and make the best of the stock investment.
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