When you begin to put your wealth into the stock market, a lot of reading material will mention trading in equities. Simply, this means selling or buying shares of stocks, representing ownership (‘equity’) in a particular company. In advance of you purchasing shares of a specific company, you need to familiarize yourself with fundamental terms and techniques traders make use of in the equity market. Moreover, you have to achieve a comfort level with tools of the online share market to trade easily. Let’s explore how you can gain momentum as a beginner trader.
First, you must open a trading account online with a corresponding demat account linked to hold your shares. ‘Open trading account’ is a title you will see as a first step in your trading journey. Traditional brokers in physical offices are expensive, but if you open an online account with a reliable broker like Motilal Oswal, you’re good to go. You will need to put some funds in your online trading account so that you can place orders to buy and sell stocks with ease from the online stock market.
The adage, ‘knowledge is power’ shouldn’t be lost on you if you are a beginner in the online share market. Indeed, as a trader starting out, you may consider certain companies you wish to invest in, but you should research the financials of these. Besides this, a knowledge of the basics of trading will help you, including the latest news of the market and certain events affecting stocks, like interest rates, the financial outlook, etc. Doing homework is a vital step in online stock trading for beginners.
You shouldn’t rush to invest. Infact, you should take all the time you need to find out about a few companies you are interested in. It's important that you scan business news and read about economic details on reliable financial websites.
Online trading for beginners usually starts with day trading activities, in which beginners buy and sell shares within a day. There is no hard and fast rule to this. If you think that buying a stock can yield long-term returns after you have done your diligence to get an idea of potential profit making, then you should buy it. However, if you start with small amounts of investments, you can indulge in a few day trades for practice. The funds you put aside for trading must be used in such a way that, at the beginning, you risk only 1%-2% on each trade.
If you are a beginner, a portal like Motilal Oswal can help you gain some momentum with its learning material. Understand that the online stock market needs your devoted time, and trading is far from a hobby. If you are serious, it is akin to a job.
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