Many people aspire to enter the stock market, but are afraid of the horror stories that can be found all over the web about people losing all the capital in just few minutes. It is necessary for the beginner to understand that the stock market is very much volatile with dangers of investments getting doomed. But there is also a brighter side to it, where huge profits can be made. It does require careful planning, taking wise and prompt decisions and not getting influenced by others.
Useful guide to stock trading
- Invest in the necessary tools: The smart investor is one who will require a spreadsheet program, calculator, high speed computer with big monitor, high speed internet connection with good anti-virus program, color printer access to stock screener along with a demat account with one of the best Stock Brokers in India.
- Open account with online stock broker: It is necessary to find out the commission fees as well as other service charges taken by the stock broker and compared with the competitors so as to find the best one. The account is to be used to access stock market information, educational programs and resources that can be used to have a strong start in the market.
- Research on different investing strategies, select one or two: Books and site are undoubtedly fabulous resources to come across stock trading strategies.
- Jot down the trading plan: It will act as the guide to stock trading detailing about when the person is to get out and in of the stocks, the amount to be traded on a particular stock, when to sell, risk management and how to specify the goals and objectives.
- Identifying good trading candidates: Good stock scanner will be necessary for technicals. The important tools required for trading is to be offered by the broker.
- Practice selling and buying of stocks: Prior to making investments in stocks, a practical and smart thing to do will be to paper trade, when learning and evaluating strategies. It is here that a fake portfolio will be required of the trades, until complete confidence is gained in the strategies. Watch portfolio services are to be offered by the broker.
- Know stock market trend direction: Prior to trading in stocks, it becomes essential to know how the market direction is to be determined. For providing trades with adequate support, an upwardly moving market is to be purchased. But strong downward trending market only will work against long trades.
- Amount of capital to be invested: Budget allocation for the trade is undoubtedly an important aspect that should be taken into consideration.
- Incubation: After a stock is purchased, it gets into the ‘incubation period’. Here, nothing can be done by the trader, but to wait and watch development of stock pace.
- Know when to buy and sell: It is necessary for beginners to know when they should purchase and exit a position for protecting their initial capital and gains. Stop loss is one such example based on percentage or price volatility of stock.
It is important for every beginner in this industry to take adequate precaution and gain useful knowledge on how stock trading is to be done the right way.