Trading can be a very interesting and rewarding opportunity. Several newbies try their hand at the stock market expecting great profits. But, more often than not, they walk away with more losses than profits. These people have one major shortcoming. They have not understood the fundamentals and the technicalities of the stock market. Hence, it is advisable to learn the basics, follow a trading guide, and have an actionable plan before beginning to step into the actual stock market to cut down on losses and gain profits.
Benefits of stock trading
Online stock trading comes with several benefits. Here are a few of them:
1. Make money
Once you get your basics right and gain a good insight into the fundamentals of the stock market, making profits can be easy. Ensure to find stable stock with less volatility so that they don’t move in unpredictable patterns.
2. Earn dividends
Stock trading is a great way to smartly invest money and manage your returns efficiently.
3. Fast returns
While long-term investments can help you gain profits after a reasonably long period of time, day trading can help you enjoy immediate profits.
How to start online trading?
There are 4 main steps that can form a base for your online stock trading guide. Ensure to follow these to start your trading journey successfully.
1. Open a Demat Account with a broker
The first step towards online stock market trading is to open demat account. There are several online stock brokers available that can help you set up a Demat Account through simple steps. Consider factors such as maintenance charges, the commission charged for trading, and how user-friendly the trading platform is. Then, get yourself familiar with the platform and explore its functionalities.
2. Research on the fundamental of stocks
Gaining a deep insight into some of the basic terminologies of the stock market. Some of the terms you could start with are bear market, candles, highs and lows of the candle, the volume of the stock, uptrend, downtrend, and others. You could either take a course online or read up a few books to gain an understanding of these.
3. Learn the analysis
You could either incorporate the concept of fundamental analysis or technical analysis. Technical analysis studies the price charts across time frames and helps you employ price action strategies based on the observed patterns. Whereas, the fundamental analysis tracks the revenue streams and growth curves and helps analyze stocks.
4. Understand both the costs and the stocks
It is not only important to analyze the stock in detail, but it is also necessary to gauge the amount of investment you would have to make to start with online stock trading. Understand how much capital you are willing to risk and trade accordingly. While trading, it is also important to maintain a good emotional balance as it determines the profitability of your trade.
It is best to start online trading by following an online trading guide. Keep in mind to understand the fundamentals of the stock market and familiarize yourself with how to analyze stocks while also considering your risk appetite to trade effectively.