Share Market– A term which is one of the most commonly word trending after the Harshad Mehta bio “Scam 1992”, but still people are mostly in dilemma from where should they start the Trading. So, Yes you are at the right place. I will try to explain you the basic of trading.
Share market have few basic terminology which we should be familiar with before starting the actual trading which are as follow-
- NSE(National Stock Exchange) and BSE(Bombay Stock Exchange) the two large exchanges in India where all the trading and investment happens in India.
- SEBI(Security and Exchange board of India) is the regulatory body that manages both NSE and BSE.
- Nifty and Sensex- Nifty is derived from ‘National Fifty’, Sensex is derived from ‘Sensitive Index’. Nifty consists of 50 selected stocks from the top 50 companies in NSE, while Sensex consists of 30 selected stocks from the top 30 companies in BSE.
- Broker, a middle man between stock exchange and the trader or Investor.
- Demat Account, an account similar to bank account where instead of money it hold the financial securities in electronic form.
- Trading account, an account where the exchange of share/equity takes place.
The process of trading
- When you buy a share using your trading account, money is transferred out of your bank account, and the share is transferred into your Demat account.
- When you sell a share, it is transferred out of your Demat account into the share
market. The money resulting from the transaction will be made available in your bank account.
So where to get this Trading and Demat Account?
There are many Broker app available where you can make both Trading account and Demat Account with a simple clicks. All you need is Pan Card, Aadhar card and 2 photos. I have been using Angle Broking and Zerodha app as broker app. Selection of broker app is individual user’s choice. Few Bank’s can also help you this broker account.
Types of Trading
There are two type of trading technique which can be selected in app while purchasing the shares-
- Intraday trading or day trading or marginal trading where you must square off all positions before the market closes.
- Delivery trading involves buying the stocks and holding them for more than one day, thus taking their delivery.
Process of buying/selling of shares
I believe that you might have got an brief introduction of share market and trading, and also you might have already created an Demat account and Trading account with one of the brokers. So, let go directly to the process of how do you buy and sell shares. For demonstration purpose, I will be using Angle Broking as a broker to explain you the process. After creating the account through broker, we need to link any bank account of yours to broker app. This will be used to add/withdraw fund to your bank account.
To buy/sell the share, we need to select the appropriate share we wish to buy and corresponding select the buy/sell option as shown in the above image.
To buy/sell the share select the desire quantity, market price to sell, trading type- Delivery/Marginal, and click on submit Button. They is one more important order to be placed along with buy/sell order i.e- stop loss. A stop-loss order is an order placed with a broker to buy/sell a specific shares once the share price reaches a certain price. A stop-loss is designed to limit an investor’s loss on a security position. So, please add your stop loss as per your analysis. One can check the status of buy/sell order in the “order” tab adjacent to market tab.
Which share to invest in?
No one will tell you the exact detail about which will be a best share to invest in and also beware of this fake hint, you are bound to suffer in the end, So it’s always better to find out the history/analysis of the shares by yourself. I can help you with one of the share analyzing technique which I have been using it from quite a while and also it is industry recommended called as “candlestick patterns”. This analyzing tool come handy with your broken app, so easy to use. Below I have explained some terms in this patterns.
As you see the above candlestick pattern, there are two types of patterns as Red candle and Green candle. So, a red stick is a candle is formed when the share open high and closes low for the selected particular period for the candle to be formed and and green candle is formed when the share opens low and closed high for the selected particular period for the candle to be formed. This candles help to predict the next opening/closing of share price on live basis. Also, you can select many mathematical analysis to under the graph better from “studies” tool. You can see the past history of the share price from the period row at the right bottom. So, overall a very handy tool for analysis point of view.
Along with this, start noticing the companies around you. If you like the product or services of any company, dig deeper to find out more about its parent company, like whether it is listed on the stock exchange or not, what is its current share price, etc. For example- if you’ve been using HDFC debit/credit card for a long time and satisfied with the experience, then investigate further about HDFC Bank. The information of all the listed companies in India is publicly available. Just a simple ‘Google search’ of ‘HDFC share price’ will give you a lot of important pieces of information. (Try it now!)
I will also recommend few financial books that I have read, you can go through those books to have more understanding how to invest your money wisely.
At the end, a very small hint for the beginners, try investing in the large cap companies i.e the company which has been started and listed for more than 10-15 years ago, the chances of these company giving loss in very less but in the end get you homework done!
As a financial analyst, I think these were some basic that any beginners can go through to give a quick start to investment, but there are many more things in share market which I will try to cover in some other blog.
Also, feel free comment in the feedback form, if you have any doubt or you would like me to cover any particular topic. Thank You for giving your time and reading this article.
Thank You for the kind word and regarding your query, you can’t open a demat account in your name directly…
Thank You Rohan. Yes it indeed is my favorite too. Keep following for the new content.
Wohhh how did I missed this blog🤔 This was something new to me, I have heard by elder brother talking…
Thank you. True Sam Berns is such a person I always forward too.
Thank you. There is a new blog coming this Sunday, keep following!