Steps on How to Buy and Sell Stocks?
The internet is full of recommendations, blogs, articles, and study material for new and experienced traders and investors to understand the art of buying and selling stocks. But in this sea of information, you might miss out on a crucial point – when you buy stocks or sell stocks, there is always an approach unique to every trader or investor.
So far, if you have been following recommendations and financial advice from the internet and your peers in the stock market on how to buy stocks or how to sell stocks, it is time for you to filter out only the most genuine bits.
Important Steps to Help You Buy Stocks or Sell Stocks
The stock market never comes with any guarantees or assurances, which is why you must tread carefully and always look out for more and more information on every stock you want to buy.
For example, penny stocks are quite popular among small-time investors because they are cheap. However, they are notorious for causing losses if they are the only stocks in your portfolio. Therefore, trading and investing in the stock market calls for balance and a sense of discipline in many ways.
Also Read: Portfolio Investment & Its Types
These are some important steps to follow if you are looking to buy stocks/sell stocks:
- Start with financial planning. Yes, the most important step is not to first get a trading or demat account but to examine your financial capacity to invest, your financial goals, the investment horizon, any liabilities, and a financial support system in case of emergencies. For example, if you have excess funds meant for only medical emergencies, be sure not to loop them into your stock market investments!
- Another thing that new traders or investors must do is look out for blue-chip firm stock. Blue-chip firms are called so because of their reliability and stability in the stock market. These companies generally have a DSPP or a direct stock purchase plan on their websites that enables the investor to directly buy stocks or sell stocks.
- Research, compare and find a stockbroker who can help you with opening an account. You can also access their research, updates and knowledge essential for trading and investment. As a newcomer in the market, the first time might be tough without adequate guidance, which can discourage you from investing or pursuing any opportunities at all.
- The next step is to open a stock brokerage account with a SEBI-registered stockbroker of your choice. Generally, it is better to have a dematerialisation (demat) account as well as a trading account, but it depends on what you want. For example, most traders who carry out frequent trading activities or conduct intraday trades opt to have only a trading account where they don’t need to store their shares for the long term.
- Ensure that you follow the correct processes with the necessary documents while opening the stock brokerage account. These days, with online trading, you can easily open an online account with your broker’s help and minimum documentation. However, a few documents such as your PAN card, Aadhar card, bank statements, and application need to be available to open the account. Any missing documents can lead to a lot of hassles.
Also Read: Document Required For Opening Demat Account
- Once your account has been authenticated and you receive your credentials, you can start buying and selling stocks. Reputed stockbrokers provide adequate support for new investors and traders so that they understand how to buy stocks and how to sell stocks. But understand that there will be some brokerage charges involved.
As mentioned earlier, the most important part of trading or investing in stocks is following some basic discipline in terms of planning and consistency. If you are also familiar with how the market has no place for emotions, it simply means you should not be fearful when you buy stocks or greedy when you sell stocks.
Share Market Knowledge Centre
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Frequently Asked Questions
A company’s stocks can be identified as suitable if the company has maintained a good financial record and a stellar reputation in the market over the years. It will also help if you can follow the latest news on the company at least for some days before you can buy their stocks, for example, major corporate appointments, new product launches, etc. Though this is not a hard-and-fast rule, it is useful for choosing a good company’s stocks.
Once your broker places the stock purchase order, they will forward the order to the stock exchange for which a sale order will be found. After the transaction is complete, the stock units you have bought will be credited to your demat account.
Yes, a PAN card is mandatory when you are dealing with any financial transaction in India. Since you will be making financial transactions when you buy stocks or sell stocks, your PAN card is necessary to open a demat and trading account.