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Stock Market Tips For Beginers

The document provides tips for beginner stock market traders and investors. It discusses the differences between traders and investors and advises understanding the basics of stock markets. It recommends selecting a reputable stockbroker and always using stop losses on trades. The document advises avoiding margin trading, short selling as a beginner, and derivatives markets. It notes stock trading requires skills and experience and may not be suitable for everyone. It provides dos and don'ts, such as starting small, using demo accounts, diversifying investments, and avoiding emotional or timed decisions.

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NarendraVukka
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Download as DOCX, PDF, TXT or read online on Scribd
163 views

Stock Market Tips For Beginers

The document provides tips for beginner stock market traders and investors. It discusses the differences between traders and investors and advises understanding the basics of stock markets. It recommends selecting a reputable stockbroker and always using stop losses on trades. The document advises avoiding margin trading, short selling as a beginner, and derivatives markets. It notes stock trading requires skills and experience and may not be suitable for everyone. It provides dos and don'ts, such as starting small, using demo accounts, diversifying investments, and avoiding emotional or timed decisions.

Uploaded by

NarendraVukka
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 6

1. THE GREAT DIVIDE: TRADER OR INVESTOR?

To start with, you should first understand the difference between a


trader and an investor. A trader is someone who might buy stocks and
might sell the same within minutes, hours, or days. An investor, on the
other hand, is a long-term market participant who can hold on to his
purchases for several months and even years.

You should clearly understand the difference between the two and
know what you want to be. This is because trading strategies do not
work for investors and investing strategies fail to work for traders. So,
pick a side at the beginning as this will work as the foundation of your
stock market journey.

2. UNDERSTAND THE BASICS OF THE STOCK MARKET


Once you have picked a side, the next step in how to invest in the
stock market is to get the basics right. Get the basic idea of what
BSE, NSE, Sensex, and Nifty are.
Spend at least a few days mastering the basics so that you actually
know what to do once you get yourself a trading account.

3. SELECTING A STOCKBROKER
One of the most important decisions that you'd be required to make at
the start of your trading journey is to pick a stockbroker. There are
several stock brokers in India, and the selection can be difficult for
beginners. Focus on factors such as the reputation of the broker,
trading portal or software, and brokerage to make a decision.
4. USE STOP LOSS ON EVERY TRADE
Check the order screen on the trading portal of your stockbroker, and
you will see the stop-loss option. A stop-loss helps you reduce your
losses as it lets you select a price at which your position will be
automatically squared off. For instance, if you are purchasing 100
shares of SBI at Rs. 350 and expect its price to rise, you can put a
stop loss at Rs. 345.

If at all the stock price falls, your 100 shares will be automatically
squared off when it reaches Rs. 345. Most brokers now allow you to
place a stop loss at the time you place the buy/sell order.

5. AVOID USING THE MARGIN FACILITY


Lack of capital is one of the most common problems for stock market
traders. To help traders with this problem, stockbrokers now offer the
margin facility. For instance, a broker can provide you with a margin of
5x on your capital. This means that if your trading capital is Rs. 1 lakh,
you can still buy shares worth Rs. 5 lakhs.

6. UNDERSTAND DIFFERENT TYPES OF ORDERS


To help traders who cannot spend long hours in front of the screen
when the market is live, most stockbrokers now offer many different
types of trade orders. Some of the most common types of trades are
Normal, Stoploss (SL), Margin Intraday Square up (MIS), Bracket
Order (BO), Limit Order, and Cover Order (CO).

7. DO NOT SHORT-SELL IN THE INITIAL DAYS


You can make money in the stock market, even when the price of a
stock is falling. Known as short-selling, it is the opposite of placing a
buy order.
8. STAY AWAY FROM THE DERIVATIVES MARKET
Another valuable stock market investing for beginner’s tips is to
avoid trading stock derivatives. The derivatives market is mostly made
up of futures and options. These are contract-based purchases which
have a fixed expiry date. Just like the margin facility, the derivatives
market looks very attractive as it allows you to make bigger purchases
with little capital.

For instance, you can purchase a futures contract of SBI with only a
margin of about Rs. 2 lakhs at the current price of Rs. 360. One
futures contract of SBI contains 3000 shares. Purchasing 3000 shares
of SBI in the cash market at the price of Rs. 360 each would cost you
more than Rs. 10 lakhs. While professional traders regularly trade
derivatives, they are not for beginners.

9. STOCK MARKET IS NOT FOR EVERYONE


While the stock market can be highly rewarding, and a lot of people
have made a fortune just from the market, it is not for everyone.
Successful stock trading and investing require a lot of knowledge,
skills, experience, and discipline and not everyone has or can develop
these qualities.

One of the most important stock market trading for


beginners advice is to stay away from the market if you have tried it a
few times, but things failed to work in your favour. If you are still
interested in the stock market, you can consider investing in equity
mutual funds. These funds invest your money in the stock market, and
the portfolio is managed by experienced professionals.
Some Other Important Dos and
Don’ts
Dos

 Start with small capital in the initial days


 Use a demo trading account to improve trade accuracy
 Always have a stop loss and target price before placing a trade
 Understand technical and fundamental analysis if you want to be a
stock trader/investor
 Diversify your investment if you have long-term investing goals
 Try to understand the financial reports of companies

Don’ts

 Do not trade stocks that are in news for good or bad reasons
 Stay away from external advice
 Never invest the money you need
 Beginners should avoid IPOs
 Do not get emotionally attached to a stock
 Do not try to time the market
Nifty 50 Companies & BSE 30 Companies
Sensex 30 means there are 30 companies in the Sensex index.
Nifty 50 means there are 50 companies in the Nifty index.

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