What do you know about the stock market? You probably know some information about it, but one common misconception is that you will get rich quickly just by investing your money in the market.
Well technically, you can get rich. However, in order for you to do that, you have to do some things first to make that happen. Share market trading requires every investor and trader to have tremendous amounts of patience to reap the benefits- one of which is earning big bucks.
Who Can Trade in the Share Market?
Actually, even ordinary people can start trading or to be part of the stock exchange firm, provided that you do the prerequisites. For starters, you will need a brokerage account and you might want to get a stockbroker while you’re at it.
Next, you will then be required to make an initial deposit; any amount will do. But, take note that the prices of the stocks will vary depending on the company you’re getting the stocks from.
The Different Types of Trades
The most common notion of the stock market is that trading involves either the buying or selling of stocks. However, that is not the only thing that you can trade.
Aside from buying/selling stocks, you can also buy or sell stock futures and options as well. In fact, this is done rampantly in India due to the sheer volume of traders in the country.
There are also some terms being thrown around that most beginners may not know of. Some of these are the intra-day trades where buying or selling of shares is done at the same trading day, the swing trade refers to holding your stocks for at least 2-3 days before you sell them. For the people who are more patient, they can do a Positional trade where the shares are held for more than 2 weeks before making the trade.
How to Make Money?
The primary way to earn money is through trading. You can buy shares at a cheap price and you sell them at a much higher price so that you can gain more profits.
Analysis and Forecasting Are Required
The two skills that you need to know before you can actually start making a lot of money is analysis and forecasting. The former is where you make use of fundamental and technical analysis to look at data and see how usual trades are made.
Forecasting is the ability to predict price movements. Although, keep in mind that the stock market never actually has a steady flow; you can still predict with relative accuracy how the market will move in the near future.
Trading Tips for Beginners
- Make sure that you make decisions in the stock market with a clear head. Never let emotions get in the way to avoid bias and the possible loss of shares
- Planning is necessary to make the best trades. You have to plan where to buy shares and you also have to create a strategy to sell them to potential buyers
- Timing is also key. Most seasoned traders say that 9:30-11:30 AM is usually the best time to make trades in the stock market.
- Do note that the stock market also follows supply and demand. So, the more there is demand for this particular share, the higher the price will be. On the other hand, if there is an overabundance of a particular stock, prices usually go down.