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The CPI, or Consumer Price Index in India, had hit a year-on-year increase of 7.79% in April 2022, indicating high inflation. Therefore, the value of your savings would have gone down simultaneously as the same savings can now buy less goods. In such a situation, in order to protect your savings, you may need to invest them in high-return financial instruments, such as stocks, so that your overall returns exceed the inflation rate. The following are the steps to take to start trading in share markets.
Key Takeaways
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Stock trading offers wealth creation, portfolio diversification, and flexible strategies suited to different risk levels, time commitments, and financial goals.
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Various trading styles day trading, scalping, swing, momentum, and position trading, help investors capitalise on market movements in different timeframes.
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Online trading platforms enhance accessibility, enabling beginners to start trading stocks quickly with advanced tools, real-time data, and low-cost execution.
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Opening a free Demat account is simple and requires only basic details, KYC completion, and online verification to begin trading.
Types of Trading in Stock Market
Stock market investment provides beginners and traders with a chance to accumulate wealth, diversify their financial holdings as well and take part in the development of listed corporations. It enables investors to take advantage of the market trends, both in an upward and a downward trend, based on the investment plan. As the online platforms develop, stock market investment has become accessible, and thus, traders can use various approaches, depending on their financial objectives. Here are some types of trading you can choose from:
1. Day Trading
Day trading is where stocks are bought and sold during the day. The traders strive to capitalise on the small price fluctuations and demand rapid decision-making.
2. Scalping
Scalping is an ultra-short-term form of trading in which traders will buy and sell on numerous small trades during the day as prices change and make tiny profits.
3. Swing Trading
Swing trading is aimed at seizing movements in the prices over a period of several days or weeks. Technical analysis helps traders determine continuation and reversal trends.
4. Momentum Trading
Momentum traders acquire stocks that are strongly heading in a single direction and hope to allow the trend to play out, and hope that some indications of an inverse trend emerge.
5. Position Trading
Position trading involves long-term investing in stocks which the traders keep and even sell the stocks after months or even years, based on the market trends and fundamental analysis.
Risks of Stock Trading
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Volatility: Stocks can be volatile, which means their prices can fluctuate wildly. This can lead to losses if you're not careful.
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Risk of loss: There's always the risk that you could lose money when you invest in stocks.
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Lack of control: You don't have any control over how a company is run, which can affect the value of your investment.
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Time commitment: It takes time and effort to research and invest in stocks.
Overall, stock trading can be a great way to grow your wealth, but it's important to be aware of the risks involved. If you're considering investing in stocks, it's important to do your research and understand the risks involved.
Current Impact of Online Trading
The online sites have changed the trading environment in which individuals can now easily, swiftly and at lower costs start trading in stocks. The traders can react quickly to any changes in the market with the help of the advanced tools, real-time charts, and instant order execution. This online movement has increased accessibility and so even a beginner can start trading stocks anywhere and do so with minimal barriers. Consequently, there has been an increase in the level of market participation, which has increased liquidity and efficiency in the stock markets.
How To Open a Demat Account Online With Angel One?
Simply complete the following tasks to open a free demat account with Angel One:
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Go to the Angel One website and click on ‘Open Demat Account’ at the top.
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Enter your name, mobile number and city.
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Enter the KYC details.
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Enter further information, such as bank details, selfie, signature, etc.
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Complete a few more requirements. Once done, your account will be activated.
You can learn more about how to get started on the Angel One app from this article and this blog as well.
How To Start Trading in the Share Market?
The following are the key steps to start trading in the share market.
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Choosing Your Broker:
Research and select an online broker that aligns with your trading needs (fees, services, platform).
Prioritise security, reliability, and customer service.
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Demat & Trading Accounts:
Open a Demat account (for electronic shareholding) and a trading account (for buying/selling).
Both are required and linked to a reputable broker registered with NSE or BSE.
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Funding Your Account:
Log in to your accounts and deposit funds using online banking or transfers.
Remember, trading profits are taxable.
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Trading and Monitoring:
Access live market data, research stocks, and place orders through your broker's platform.
Regularly monitor your trades to optimise profits and manage risks.
Requirements to Start Trading
There are some basic requirements to start trading in the Indian stock market:
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Open a Demat and Trading account with a trusted Depository Participant or stockbroker platform.
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Link your trading account to your bank account for financial transactions. Add money from your bank account to your broker’s account.
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Analyse your risk tolerance limit, the amount of time and effort that you can put in, etc.
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Decide on a set of trading strategies, e.g. intraday or delivery, sectorwise or sizewise preferences.
How To Choose Stocks for Trading?
This information might help to look at certain important checkpoints when choosing stocks to trade:
1. Analyse the stocks - This includes learning the key terms and concepts related to the fundamental and technical analysis of stocks. Fundamental analysis evaluates the stock price by measuring the company’s key performance and other indicators such as earnings, profit margins, assets, etc.
Meanwhile, the technical analysis evaluates the stock based on the past price and trading volume of the stock to predict future potential. Knowing fundamental and technical analysis will help you understand the key stock-related terms and thereby analyse the key features of the stock price or the company fundamentals.
2. Study market trends - You must compare the performance and metrics of the stock with others. That will help you understand not only the consumer but also the presence of competitors in your field.
3. Learn to manage risk - Volatility is an implicit characteristic of the share market. So, a beginner needs to understand the way to prevent heavy losses. While executing a trade, you need to set a stop loss price to minimise the loss. Failure to put a stop to losses may damage your capital heavily.
4. Ask an expert - The share market is unpredictable. Nobody can predict a stock price accurately. However, taking advice from an expert helps beginners make the right trading decision. It guides you to make the right choice.
5. Start with safer stocks - 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.
6. Diversification - Make sure that your portfolio is adequately diversified overall. This will help in reducing the concentration of investments in a handful of companies.
To be an active trading participant for the long term, learn how to slice up your investments to make sure you are spending in the right segments in a range of investments, including stocks, options, ETFs, mutual funds, IPOs, and precious metals.
Final Words
Trading stocks in the share market has become more accessible with online trading platforms. Additionally, these platforms offer tools and resources that you can use to analyse the stocks and form your strategy accordingly. Remember to use a trusted broker or DP that provides seamless services and support. With the right knowledge and tools, you can create an investment strategy that matches your goals. But remember, diversification and using the right trading strategy is crucial.