Investing in the share market is both exciting and rewarding but it can also be quite risky especially when you’re a beginner. In this guide we’ll talk about the basics of trading and how you can invest in share market with confidence.
- Understanding Options Trading – Options trading is a type of trading where investors buy or sell contracts that gives one the right but not the obligation to buy or sell an asset, like a certain stock, at a specified price before a certain date. Options do not give you ownership in the company, unlike buying shares; however, they do give you the ability to place a bet on the probable movement of a stock’s price.
There are two types of options – call options and put options. A call option lets you buy a stock at a stipulated price before the contract expires. A put option allows you to sell a stock at a specific price before expiration.
- Open a Trading Demat Account – Before you can start trading you need to open a trading demat account. It acts like a digital locker where your stocks are held in an electronic form. It allows you to buy and sell stocks and options in the share market. To open a trading and demat account follow these steps-
- Choose a broker- Choose a brokerage firm that would support both trading in stocks and options. Most brokerage firms offer user-friendly investment apps that ease trading more.
- Complete KYC- This mainly involves paperwork and requires you to submit your PAN card, Aadhaar card, and proof of address.
- Link your bank account: Linking the bank account to your trading account will enable easy transfer of funds during trading.
- Research the Share Market – Before doing share market investments, research the stocks that you’re interested in. The core tools of research include-
Fundamental analysis- This is a study or investigation on the financial well-being of a company through the assessment of its balance sheet, profit and loss statement, and market performance.
Technical Analysis- This is one of the methods that rely on a historical study of past price movements and patterns. Most of the time, these patterns are visualized by charts in which future price trends are projected.
Many investment platforms also offer trading view chart to perform technical analysis on stocks and options. Trading View charts give real-time data and indicators, helping you analyze stock patterns.
- Start with a Small Investment – When you first start investing, it’s wise to start small. Pick a few stocks, do the research and gradually build your portfolio. Similarly when starting with options trading, begin with a few contracts and low-risk strategies, before moving on to advanced ones.
- Choose the right investment app – To make your investment journey easier it is recommended to use the right investment app. Many apps like Zerodha, Groww, Upstox allow you to do trading right from your smartphone.
Conclusion:
Investing in the stare market requires a lot of research, the right approach and good investment apps or brokers. You can also create a personal index—a customized list of stocks that you invest in, tailored to your financial goals. It’s very important to understand all the risks and manage them effectively. And remember, the key is to have a long-term plan in place to make sure you succeed in the financial markets.