The stock market holds immense potential to generate high returns on investments. Therefore, it has become an attractive destination for many people who want to grow their money. Hence, the number of people participating in the stock market keeps rising every day. Since you landed on this page, we assume you are among the interested ones too. Today, we shall explore how to start trading in the stock market. Yet, one should realize that stock trading demands proper knowledge and skills.
Hence, before diving into the stock trading process, let us discuss what you should do to prepare yourself before entering the stock market.
Preparing yourself for the stock market
Although the stock market is a viable option for good returns, the risks involved cannot be ignored. Therefore, it is even more advisable for novice traders. Here are some tips if you are about to begin your stock market journey.
Learn stock market basics: It is important to know how the stock market functions to emerge as a successful investor. Learn all key terms related to it, such as stocks, shares, stock price, exchanges, etc. With a thorough knowledge, you will be able to execute profitable trades.
Decide your investing strategy: One can be a short-term trader or a long-term value investor. But, first, realize what you want to achieve from stock market investments and make an appropriate strategy.
Consider your financial position: Always invest what you can afford to lose. For example, if you put all your wealth in stock markets, there is a risk of losing a large chunk of it if the market tumbles. Also, save for emergencies and necessary expenses. Finally, invest only after setting aside money for basic needs.
Although learning stock market investing never ends, you can start after going through the basics properly. Here are the steps to guide you through your first stock market investment.
Search for a suitable stockbroker
It is the first step where you need to find and select a stockbroker. Stockbrokers provide the facilities to open a Demat account and a trading account. A Demat account is a digital repository of your securities, whereas a trading account enables you to place orders for those securities. However, you must know that brokerage firms charge you for providing their services like annual maintenance charges. Further, check the brokerage fees payable every time you execute an order. It usually depends on an asset’s value and trading volume. In addition, a brokerage may include certain other kinds of charges such as securities transaction tax, exchange transaction charges, GST, SEBI charges, and stamp duty.
It is therefore essential to choose a brokerage firm carefully. Remember that high brokerage charges shall lower your profits. Look for brokerage firms such as Kotak Securities with considerably low maintenance fees and offer free Demat account opening. They offer special trading plans too. You get discounted brokerage charges applicable to different asset categories. For instance, you avail zero brokerage facility on intraday trades across various asset segments with a trade-free plan. In addition, you have access to curated stock recommendations from experts. Opt for such handy plans considering your needs and financial targets.
Open Demat account and trading account
Once you select a broker, start the Demat account opening and trading account opening process. Either visit your broker or open these accounts online. Most reputed institutions now have online portals where you can open a Demat account and trading account easily. If you do not have any of the accounts, go for 2 in1 accounts offered by institutions like Kotak Securities. It has features of both a Demat account and a trading account. The trading and Demat account opening procedures are as follows.
1. Visit the online portal and find trading and Demat account opening forms.
2. Fill in your relevant details such as name, date of birth, mobile number, email id, pan no. etc.
3. Comply with know your customer (KYC) guidelines. Submit necessary documents to verify your identity, address, and bank details. You will need the following documents-
- Identity proof: adhaar card, voter id, passport,
- Address proof: electricity bills, landline bills, land lease agreement, etc
- Bank account: bank statement, canceled bank cheque, and passbook
4. Next, your stockbroker may ask to visit its branch office for in-person verification. Complete the due process and apply.
5. Upon completing the above steps, you will receive login credentials of your Demat and trading account login credentials. Use them to access your accounts.
Add money to your trading account and start trading.
After opening trading and Demat accounts, it’s time to add funds and begin your journey. Add the required money into the trading account you will need to place orders. Then, find stocks trading in various stock exchanges and place your bid as you wish. However, first, analyze it in detail. Use different tools available on a trading platform to analyze a stock fundamentally and technically. When you are all set, make your first investment in the stock market