Stock trading is an art and science. It involves learning essential strategies, understanding the trading jargon, and predicting how the market functions based on past stock performance. Despite years of practice, it is not easy to crack this code. But for new investors, trading in the share market is a considerable challenge. The trick is to be patient and seriously study how the share market today works.
So, if you are a new investor, these essential facts should help you. As a new investor, you need to understand the market basics, the types of trades conducted, and how to invest.
Share markets and depositories
In India, share trading is done on two exchanges:
- The National Stock Exchange
- The Bombay Stock Exchange
There are also two central depositories under which all depository participants are registered:
- National Securities Depository Ltd
- Central Depository Service Ltd
Trading types
To invest money in the share market, say in TCS share price, you need to actively buy and sell for booking profits. Today, you can do online trading through brokers or an investment company. There are two types of trades conducted:
- Intraday trading: This involves buying and selling shares within a single trading day. Here, the investor buys shares to earn profits by harnessing the stock movements. The fluctuations in the share prices are harnessed for earning profits. In day trading, orders placed by the investors are squared off before the end of the trading day.
- Delivery trading: This involves purchasing sticks and holding them for more than one day, thereby taking their delivery. You can sell the shares anytime upon booking a profit. Delivery trading is considered secure than intraday trading.
Market trends – the bulls and bears
While learning about stock trading, you need to understand the bull and bear market trends:
- The Bull Market: This term is used for an upward market trend. When the economy does well, the market exudes confidence. This is when share trading increases and more companies go public by registering on the stock market.
- The Bear Market: When the stock prices begin to fall consistently, the term ‘bear market’ is applicable. This is when an economy is heading towards a recession phase, thus creating panic in the share market. During this time, investors typically begin to sell off their shares, and cut their losses before the market falls dramatically.
How to invest in stocks?
If you want to say invest in HDFC Bank share price, follow these steps:
- Define your investment strategy
- Define your investment goals and horizon
- Research the stocks and how they will help you achieve your goals
- Enter the market when the stock prices are low
- Sell them upon booking profits
- Review and monitor your investment portfolio often
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