How to trade in stock market in 8 simple steps

8 Simple Steps how to trade in stock market, a beginner's guide

A common misperception regarding the stock market is that it is a field of losses. Yes, it is true that you can incur a loss in the stock market, but it would be on account of you, having less knowledge about the share market and not because of the share market itself.

Learning is a huge step toward being successful in the stock market. So first learn How to trade in stock market. However, you also need to do some practical actions. Only then will you be able to understand the share price and other factors such as market fluctuations, and financial news impact on share price, all of which will enhance your learning.

Investing in the stock market has become more accessible as the digital era has developed. You may now trade stocks and earn big returns from the comforts of your home.

(Image source: tradebrains)

Open a Trading Account

A good way to understand how trading works is to open a trading account with a reputed financial firm. You can easily open a trading account. fill an application along with the required documentation, and once verification is done, you will have an active trading account. In case of online application, the whole process is seamless and paperless.
There are two types of broker where you can open your Demat and Trading account.

Full-Service Broker

These offer a full range of traditional brokerage services, including financial advice for college planning, retirement planning, estate planning, and for other life events. This customized advising justifies the higher fees that they typically charge, normally a percentage of the value of your transactions.

Discount Brokers

These offer you tools to select your investments and place your orders. Here you can trade on your own knowledge, they don’t advice you. They can only provide a trading platform such as website or their app. They may have other requirements and fees. Be sure to check on both as you look for a brokerage that’s best for your financial situation.

Learn to Analyse Fundamental and Technical of stock

Study the basics of technical Analysis and look at price chart. Your experience with charts and technical analysis now brings you into the magical realm of price prediction. the technical analysis evaluates the stock based on the past price and volume chart of the stock to predict future potential.

Fundamental analysis evaluates security by measuring its intrinsic value. It considers various dynamics including earnings, expenses, assets, and liabilities. Do not stop reading company spreadsheets, because they offer a trading edge over those who ignore them. However, they won’t help you survive your first year as a trader.

Practice Trading, Buy your First Stock

It’s now time to put your trading account to use. It doesn’t have to be many shares or even expensive shares. You can invest a few hundred rupees and still learn a lot about the share market by trading with those shares. This is the point at which you can use the knowledge you have learned. Which stock should I purchase? Which order should I give? When should I sell? When should I make a purchase? These questions will be answered when you trade with real shares.

There are some virtual trading platforms available that you can use. While the whole process remains the same, you do not need real money to buy shares. This keeps you financially safe while also helping you learn more about the share market.

When you make the switch and begin trading with actual money. Traders must learn to live in peace with the opposing forces of fear and greed. These are feelings that can only be felt via real profit and loss, not through paper trading. As a novice trader, you must acknowledge this difficulty and resolve any unresolved financial and self-worth concerns.

How to Manage Risk

When you are running with real money, you need to pay attention to positioning and risk management. Each position has a holding period and technical parameters that favor profit and loss targets, upon reaching which you need to exit in time.

The complexity of risk management techniques will vary and depend on your particular strategy, but there are some overall tips. Know your entry and exit points and stick to them, unless you have a good and objective reason to change them. Set stop-loss and take-profit orders accordingly. Recover losses as quickly as possible and avoid the emotional or psychological urge to take on greater risks in hopes of recouping losses. More importantly, don’t panic.

Start With Good Stock

Even experienced traders may find it difficult to select the correct stocks. Beginners should look for stocks that have stability, a strong track record, and the potential for steady growth.

A big capital loss, in the beginning, may bring your confidence down. A wise choice is to start with the less volatile stocks. That may give you a slow start. But those stocks are more likely to sustain a good performance even in adverse conditions.

Learn to Stop the Loss

Volatility is an implicit characteristic of the share market. Thus, a novice needs to understand how to avoid suffering significant loss. To minimize losses, you must set a stop loss price before executing a trade. Failure to put a stop to loss may damage your capital heavily.

Learn From Your Mistakes

Mistakes are the best way to make a person a better investor. You should never be discouraged if you incur a loss in the market but analyse the thing you did wrong in the process. If you can analyse and learn from the previous mistake, you will never commit the same mistake again.

This is not enough, these are some simple steps to get you started on how to trade in stock market. This is quite a long concept where 80 percent is psychology or money management, what is your objective of investment, for how long do you trade or invest. What is your income, how much can you afford to invest etc.

A Beginner’s Guide to Trade in Stock Market