Introduction to Share Trading for Beginners
A stock market is a place where, if traded smartly; you can get several opportunities to create wealth. It has the potential to provide you with enormous profits. However, market volatility is also critical to keep in mind while trading in stocks and securities.
As a beginner, you may experience several ups and downs. So, you need to understand the aspects of share trading and the basic rules of trading in the share market for beginners.
Before jumping into the steps of trading in the share market for beginners, let’s see how share trading works.
How Does Stock Trading Work?
Stock trading means buying and selling of shares in the secondary share market. So, what exactly is a primary and secondary market? Let’s find out:
- Primary Market: The business issues new shares and securities and offers them to the public for trading. In the primary market, the transactions between businesses and buyers.
- Secondary Market: Here, an investor can buy and sell stocks issued in the primary market by different companies. Here, the transaction happens between the purchaser and the seller. The stockbroker or the stock exchange as a mediator in the secondary market
When you buy and sell a stock or share on the same day, that transaction will be called intraday trading. So now, let’s get straight into an introduction to share trading for beginners.
Simple Process of Share Trading for Beginners
If you are all set to trade in the stock market, here are the steps that you need to follow:
- Open an online Demat Account: In order to enter the stock market as an investor, you need to have a valid Demat account or trading account. Without the same, you will not be able to trade shares in the stock markets. The Demat account will work like a bank account to hold your dematerialized shares or money for trading. The share that you will buy in the future will be digitally kept in your Demat account.
- Start reading about the market trends: Even if you are not much of a reader, you will have to start reading now. Go through stock market books, financial articles, website tutorials for share trading, and so on. You will find a wealth of information in every single piece that you will read. While in your trading game, it’s crucial to not focus too much on one single aspect. Instead, you should incorporate new ideas, concepts and study everything related to the market. Simply put, a detailed and broad market background will help you all along your trading journey.
- Have a clear idea of stock quotes, bids, and asks: According to the technical analysis, market fundamentals, news, etc., the stock prices flicker. So, by gaining knowledge related to these aspects, you will be able to enhance your knowledge of the shares and the share market. Also, this will help you in figuring out the right value to enter or exit from a trade. Additionally, you should be well aware of the bid price and ask price. The former is the maximum price you will be willing to pay for buying a stock. The latter is the stark opposite. The asking price will represent the minimum value at which the seller will sell the shares. Hence, for a profitable trade, it is crucial to decide on the right bid and ask price.
- Learn the stop-Loss strategy: Market volatility is the most common aspect of share trading. So, it’s prudent for a beginner like you to understand the right way of preventing further losses. Hence, while dealing with a trade, you should know where to put the stop-loss order to minimize the loss. Failure to implement the stop-loss order properly may damage your finances heavily. So, learn about stop-loss orders and how they can help you save your money before starting your share trading
Share market for beginners could be tricky. Hence, it’s important to take expert help for trading as a beginner. Also, if you can follow the above-listed pointers, it can get easier for you to sail through the rough waters of share trading. All the best with your share market investments!
Share Market Knowledge Centre
- Demat account
- Share market
- Trading account
- Online share trading
- Intraday trading
- Futures trading
- Commodities trading
- Currency trading
Volume Weighted Average Price (VWAP) - An Overview
There is no dearth of jargon in online share trading, ranging from ones that cause new traders and investors to scratch their heads to ones that confuse even seasoned ones. Amongst the terms unique to share trading is Volume Weighted Average Price, which is commonly referred to as VWAP.
What is a Stop-Loss Strategy & How do you use It?
If you wish to invest in the stock market, you must be well equipped with the highs and lows it brings along. Surely you will gain a lot. But you should even be ready to face losses. However, nobody wishes to lose money while trading in the stock markets. Hence, it’s important to understand how to save yourself when you are certain about losing....Read More
Difference Between Shares And Debentures Explained
If you are thinking of investing in a wide variety of assets, shares and debentures are amongst the most popular options you can opt for. Both shares and debentures are means for companies to raise funds from the market. However, they are extremely different in terms of their respective meanings, structures, and returns....Read More
Frequently Asked Questions
SEBI, or Securities and Exchange Board of India is the regulatory authority in the country that was established under Section 3 of SEBI Act 1992. SEBI works in protecting the interests of traders or investors in securities. It also helps in promoting the development of the share market.
It is an arrangement that will allow you, as an investor, to deposit money and place your orders with a licensed stockbroker or a brokerage firm.
DIY or do-it-yourself is an investment strategy to build and manage your own online investment portfolios.