Stock Trading Basics for You

Buying and selling stocks is based on certain fundamentals, when followed, give you profit and you can re-invest in the stock market to earn more. You can buy stock in a company that has the potential to grow dramatically over coming months or years and profit from the rise in the stock. This is where large returns can be made when the timing of the buy is right, the stock is in a long term uptrend, and the company goes on to innovate and grow its earnings and market share.

Considerations Before Buying/Selling Stocks in India

There are several things to consider when investing with your demat trading account; you have to buy the right company, you have to buy at the right price, and the stock needs to be in a stable price range or uptrend.

These two aspects are critical when you’re considering a stock: There are the fundamentals of the company-earnings, profit margins, competitive advantage, industry, and growth prospects.

There are also the technical aspects of the price of the stock –

Is it a good price for entry? Is it a value at this price?

Is high future growth already priced in? Is the chart pattern of the stock bullish or bearish?

Is price in an uptrend or downtrend?

Is there much of a safety margin at this price?

How much lower could it go?

Be a Smart Investor

One way to be an investor is to buy stock in the best companies in the world. To be an investor, you have to add paying yourself money to invest in the stock market at the top of your list of bills. Why should your investing account not be up there with your car loan payment, utility and household bills? Many people have tight budgets but most the time it’s possible to make adjustments to free up money to begin investing. Keep your stock investment in top bracket of paying bills.

Even ₹100 a month will get you to ₹1200 in one year and ₹200 a month will get you to ₹2400 a year. This is a good start, and your success will become addictive as you see your capital grow. It’s rewarding over the years to see your account go from ₹1000, then ₹5000, ₹10,000, ₹25,000, ₹50,000 and then ₹100,000. This money can be placed in a brokerage account, regular investment account, retirement account, sip stocks and tax schemes. Use sip calculator to smartly invest in to performing sip stocks.

Tax Facility

When starting out, it’s better to go into a tax differed account if you don’t plan on touching the money for a decade or more, because it can be deposited with no income tax and it can grow tax free. If you’re doing short term speculating, then a brokerage account is needed. Brokerage accounts are quick and easy to open online, and you will want a discount broker that has small trading fees that are under ₹500 or zero balance.

Learning Account

You start with small investments and take this as a learning phase. Invest in different stocks to learn. This first account can also be one that you speculate with money that you’re willing to lose in the pursuit of big returns, or an account you plan to use long term to build enough money for retirement. Or you can have both as many people do. You can download trading apps and start stock market investment from today.

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