The stock market is one of the very few businesses in which you can double the money you invest. It could be multiplied or you can lose all the money you put in. the only thing you need to do is take action after thinking it through, be it buying or selling. Here is everything you need to know about stock market trading & how to start stock trading.
What is Stock Market?
According to Wikipedia, a stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses. These stocks are the indexes of the company’s shares.
You may have heard on the news that the stocks went up or down, this means the indexes of the company are going up or down. Various people invest in buy these stocks in exchange for money. When you buy these stocks, it means that you are buying the share of a public corporation like a bank. It works like an auction wherein you need to put up a bid for the stock you purchased. If you think the company’s indexes will go down, put a higher bid otherwise put a lower bid.
Traditional Vs Online Trading:
Both traditional and online trading have their own share of advantages and disadvantages.
It is up to you to choose which one works best for you. Here is the difference between the two-
|Traditional Trading||Online Trading|
|1. Limited to the clients you work with.||1. There is no such requirement.|
|2. This has a significantly higher cost than online trading.||2. Slightly lower cost|
|3. Limited free trades offered to clients with large cash reserves deposited with the brokerage firm or in a linked bank account.||3. Some online companies offer a large number of free trades each quarter, though others charge almost as much as the traditional brokerages.|
|4. Timing for this market is restricted to 9 AM to 4 PM.||4. This market is open 24 hours.|
|5. You can get guidance from the broker.||5. No benefit of guidance|
|6. You get fewer resources for reference as compared to online trading.||6. You get more resources like date of issue etc.|
|7. Not as quick and time-consuming as compared to online trading.||7. Quick and less time-consuming.|
Why Should You Start Trading?
1. For a Side Income:
There is no need for you to leave your current job to start trading. If you are a businessman or even a student, this source can prove an excellent way to give you the side income as this is a passive income method. You can trade with the comfort of your own home. Imagine having breakfast while earning the side cash. Isn’t that amazing? For me, it sounds wonderful. Even if you are a lazy person like me, you can trade from the comfort of your own home.
Well, it may sound like fantasy, but you can lie down on your sofa while your money gets multiplied. Of course, you have to calculate the risks as well.
2. Multiple options to choose from.
In stock trading, it is like you multiple fishes in the pond to choose from you can either invest in forex trading, futures trading, equity shares, etc.
3. To develop emotional stability.
Now by emotional stability, what I mean is you will learn how to keep your emotions in check. One thing I have learned in the stock market trading is how to deal with losses. Dealing with losses gives you the strength to get back up on your feet to try again.
4. There is no need to be a genius.
I have seen a lot of times that the proof of education matters more than the knowledge you gain. No matter what field you go in. if you need to grow you need to learn new things. After bachelors, there is more scope for people who have completed their masters and so on the cycle continues. We all have come across businesses that require education to be successful but the stock market doesn’t really require an education. All you need to do is familiarize yourself with the terms and conditions and know the process. The more you spend time on it, the more you grow.
5. Money will grow if invested.
When Arianna Grande said- “whoever said money can’t solve your problems, must not have enough money to solve them” I felt that. Money is important in almost every aspect if you dream to live a comfortable life ahead.
A lot of us save the money and keep it locked somewhere. Well, the money that is lying down like that is a waste. Start investing that money in good companies. Then all you have to do is see the amount you invested getting multiplied while you relax or focus on something else.
6. Your business expands.
If you are a businessman wanting to expand his business or get investors, the stock market might be an option for you. The more your company conquers, the more you grow and the more connections you make. Not only this you may have a chance to get an international investor through this market.
How to Start Trading Online?
1. Get familiar with things related to the stock market.
I am not asking you to learn anything here, this is like reading or watching a video about something. If you want to be an expert in this sector, you do need to be patient and start with the basics. You can read about stock marketing or take a course (which is like 1-2 hours and I don’t think that is too much).
You can even go and search stock marketing on YouTube where you will find a lot of people teaching you all the process.
2. Select an Online Broker.
When you are done learning, the next step is to select a broker according to your needs and area of interest. A broker facilitates trading between market participants, allowing you to buy stocks from sellers and sell stock to buyers. You need to find an expert who is reliable and has a good review. Since you will be investing all your capital here, be sure to double-check the company.
3. Start researching stocks.
You have an account and an investment and you are all set to trade. What do you need now is stock. Most traders start by doing a thorough analysis of a company, looking at public information including earnings reports, financial filings, and SEC reports, as well as outside research reports from professional analysts. Much of this should be provided by your broker, along with recent company news and risk ratings. Do not invest all your money. Start slow and progress gradually. Only then you can learn how to handle the risk.
4. Make a plan and stick to it.
Ok, this is the most important thing for you to know. I already explained that the stock market comes with a huge risk of losing the money. No one likes to see their money go down the drain so my only advice is to invest only that amount of money that you are willing to risk. What I mean here is you can invest all the money you like, but only if you are fine with losing the money if the situation is reversed. This risk factor reduces once you start becoming experienced but you can never be risk-free after all there is no such path where you won’t trip.
5. Don’t be greedy.
Remember how in the TV series FRIENDS, Monica starts investing in stocks with her initials. She does get successful at first but then she puts everything she had and unfortunately she loses all the money. Remember being greedy is something that might spoil the chance of making money through this field. You just need to be patient.
Still, Confused? Here are the Best FAQ’s
I hope you enjoyed reading this article and I expect you have some knowledge about stock trading or share markets.