The last year and a half have been unusual for domestic and international financial markets. Despite the dents covid 19 put in the economy, the stock market was able to catch a swift updraft, reaching their highest levels ever in 2021. As a result, a slew of new investors flocked to stock trading and the stock market to generate a new means of income, save for the future, or generally learn how to make their money work better for them. In this article, let’s take a look at our beginner’s guide to stock trading, wherein we will explore the basics of stock trading, learn how to trade stocks, and understand how you can start trading today.
In order to start stock trading, you will first need to open a Demat account and a trading account with a depository participant (DP), which will help you interact with the stock market. Your bank account, Demat account and trading account provide all the tools you need to start online share trading and learn how to trade stocks. Funds are deposited from your bank account into the trading app/platform of your choice, which you can then use to purchase stocks. These stocks are stored in your Demat account. Your trading account functions as a sort of access pass to the stock markets, as it is required to be able to buy and sell stocks while stock trading.
The world of stock trading is riddled with complex strategies, formulas and indicators, which can make the prospect of trying to learn how to trade stocks daunting at first. The key goal here, however, is to buy low and sell high. Alternatively, to also sell high buy low. All strategies etc are centred around this goal of maximising the opposite difference between your purchase and sale price.
Analysing stocks as a beginners guide to stock trading is broken into two broad facets. The fundamental analysis, and the technical analysis. To put it in its simplest terms, the fundamental analysis is a macro approach centred around identifying which industries or sectors to buy in, while the technical analysis is focused on assessing individual stocks.
If, for instance, you are looking to purchase some stocks. As part of your fundamental analysis, you will analyse current factors such as international relations, global economies, the state of the national economy, as well as current trends. Through this, you are looking to identify investable industries. You then move on to analyzing various stocks in that industry, looking at their balance sheet, profit and loss, PE ratios etc.
The world of stock trading is an immersive and complex one. Yet, in order to get started on your journey, partly due to online trading, the tools you require to start your journey of stock trading are fairly limited, and you can now start online share trading for free, as most online brokers offer little to no account opening charges. With tools such as ‘mock accounts’ that let you trade with artificial funds in order to try your hand at trading, the road to stock trading is now more accessible than ever.
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