It is helpful to learn about the basics first and then see the advanced strategies for main securities. Equity trading has a cash and derivatives section whereas currency and commodities have a different platform and set of thumb rules altogether. Understanding various types of trades, their purposes and how the rules on exchanges play are some basics that many beginners fail to understand. Understanding these will allow you to place and plan your trades well in advance. Also, once you graduate from basics, financing your longer trades successfully at menial costs becomes essential. Thus, securities lending, margin, and such concepts need to be dealt with in due course of time.
Let us discuss key tips to learn about Indian Stock Market Trading. You can open a free demat account with a discount broker to start online trading.
Learn About Stock Market Trades In India
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Stock markets are based on stock exchanges operated online. You can access the stock market through stockbrokers only. Stockbrokers are authorised intermediaries registered with SEBI, stock exchanges, and depositories to offer Demat and online stock trading services.
You can place online trades through your trading account in order to be executed on stock exchanges. You can trade the assets you hold in your online Demat accounts. You need to create your Demat and trading accounts with a registered stockbroker with the SEBI (Securities Exchange Board of India).
- A demat account is a repository for your financial securities. It is the account required by market participants to store their dematerialised financial securities.
- A trading account is required to access the online trading platform of a stockbroker. You can log in to your trading account and place online trade orders online. You need not visit a stockbroker or stock exchange, like a broker in.
Key Tips to Learn Stock Trading
Here are basic online trading strategies that can help individuals:
Stock trading needs dedicated time as learning about the market is an ongoing and time-consuming process. It is not about spare time only. You need to be dedicated to spot opportunities in the stock market.
Consider low volatility hours:
It may be easy for experienced stock traders to determine market trends in rush hours, but a beginner may not be able to do it. Rush hours are full of liquidity, but highly volatile too. The middle trading hours are less volatile as compared to the opening hours.
Determine your risk profile:
Stock trading requires you to create a plan to generate returns strategically. It is based on your financial objective and must be quantifiable. Therefore, it is vital to determine your risk profile. Individuals with a high-risk appetite allow investors to earn significant returns. It is necessary to gauge the level of risk you can take on your invested funds without a huge impact on your finances. If you are an investor with a low-risk profile, you can look for low-risk investments that are less volatile and, like debt mutual funds.
To fight against stock market volatility, stock traders need to be patient. Emotions should not affect your trading decisions. Successful traders stay logical to govern the right decisions instead of being affected by greed or fear.
Know the right assets to meet your financial goals:
Are you investing for your retirement, your kids’ education overseas or making big purchases like a home? Individuals need to determine their financial goals and the time horizon for achieving them and then choose the right investments to achieve set goals. Following an investing roadmap with a disciplined approach can help you to reach your financial goals. While selecting an investment, investors should match their risk profile with the risk involved in an investment. You should check the levels of liquidity and opportunity in an investment before putting your funds.
Maintain a Diversified Investment Portfolio:
Diversification is a common strategy for stock market participants that helps them to bring down their portfolio risk. It can help to reduce the impact of the market sideways or falls, otherwise, an investment portfolio may end up taking a big hit during such times. Considering more than one investment avenue helps to balance out your portfolio during adverse situations. Simply because if one investment does not provide you with the expected returns or even brings out losses at a particular time, another investment may cover the losses, and overall your portfolio shows profits.
Learn About Derivatives:
While many people hesitate to use derivatives using option trading is a popular method to make extra money as capital to invest in various trades. It is better to understand how these work to hedge your risks.
Thus, understand the market movements and make prudent decisions for stock trading.