You must have bought a stock on someone’s recommendation and then waited for weeks, months and perhaps years to achieve a break-even cost. Every expert of financial market has warned investors to be careful about share trading as it is a risky game. However, if you play smart, you can certainly earn big bucks from the stock market.
The reason why traders get attracted to trading in stock market is that they think that making money for markets is very easy. What they don’t realize is that there are no free lunches in life. But if you follow trading discipline you can surely make money. The first step towards trading is to open a Best Demat Account. Prior to that, you should know few basic things about trading:
- Making Money: There’s one thing called risk-reward ratio. Hence you should make sure that in the trade that you have initiated, you will not lose more than what you have desired to gain. Thus risk management plays a vital role in trading or investing in share market.
- Types of Trades: Squaring off position on the same day is called an intra-day trade and selling stocks in next 3-4 days is called a swing trade. Holding them for few months is called short-term trade and holding stocks for more than a year is called long-term trade. Depending upon your risk you should take the trade as to hold the stocks for short term or long term you need to make full payment. However, you can have exposure for swing or intraday-trade from 8-10 times depending on your broker.
- Skills Set: To be honest having knowledge is the only skill-set required in this game. After opening a best demat account all you should do is invest in small amounts and once you have learned the art of trading only then you should start trading in large quantities or trading in futures and options.
- Trading Tips: You may get various tips from your broker to your friends. However, without having knowledge by yourself, you should never initiate any trade. Trading is indeed a battle of emotions and therefore your knowledge in discipline is the only thing that can save you from losing money in the stock market.
To gain knowledge about market movements, you should take help from some technical analyst or can do a crash course in learning the art of investing. Both the exchanges like BSE and NSE offer such courses. People entering this market should start trading only if they can control their emotions, take risk and book loss/profit at their target point. Unless you have these qualities, it is not at all advised for to enter this market.
One thing that plays a key role to be able to survive in this market is maintain stop-loss order. If your stock slides beneath a certain price, you should exit that order. Rather than learning what you should be doing, you should first learn what all things to be avoided to make bucks in the stock market.