Trading is my passion, so I would like to guide others who want to make some money by investing in stocks.I started my investing life with HDFC securities in 2007, but since it was a banking institution rather than a trading institution I quickly shifted to elsewhere.
Most of the people who like to start share trading,postpone the decision,mostly due to fear and apprehension.They may have heard the stories of friends getting bankrupted trading stocks, but we have to see the good side of it,money and lots of it if you stick to a plan.
Steps to start trading in the Indian stock market
1.Start a demat account and trading account
This is the first step, I am assuming here that you have a PAN card and a bank account with online transaction facility.Do some research, get a brokerage account with a broker who is reliable and offer discount rates.It is preferable that, this broker has a mobile app so that you can buy and sell on the go. Most of the reputed share broking institutions like Sharekhan,Indiainfoline,Reliancemoney,Zerodha etc. have a mobile app.
You should research before buying any stock. Most of the time the beginners buy on tips.You can spot a beginner, when they ask you which stock is good to buy at this time.If you don’t have an idea of what to buy, you will lose money by investing on others tips.Check the financial data and do learn about technical analysis.
3.Buy a few of your favorite stock
Don’t buy too much of the stock, as you are still learning trading.Watch the day today movement of the stock, read the news and what analysts have to say about this stock.Keep a strict stoploss below which you will sell the stock.
4.Learn candlestick charting
Candlestick charting is the cornerstone of trading.You should be able to make decisions based on the candlestick charts,once you become an expert.There are many site like chartschool and stockcharts which provide free training in candlestick charting.
5.Document all your trades
Documentation is a very important step to become a successful stock trader.You make an entry after buying a stock,enter the stoploss level.After exiting the stock,write about the reason of exiting and add the profit/loss made.
6.Only buy stocks which you have researched on
Buy only stocks which you think are the best for your future.Don’t buy based on others ideas, because they may have an exit strategy but you don’t.Hence you will be trapped in stocks which others made you buy.Always buy with conviction and hold with conviction,sell when the stock fundamentals deteriorate.
7.Read books on investing and trading
To be a successful investor,you have to know what others have gone through.Fortunately we have books for helping us out.Read about the trading lives of legendary investors and traders like Ben graham, Jesse Livermore(my favorite) Warren Buffet etc. You can learn how they made their riches and how some others squandered it all.
8. Don’t follow analysts blindly
Most of the analysts work for a living. They trade for their clients, so most of their research reports will be published only after they havr entered the trade. You will enter when they plan to exit and will be trapped in the trade. Stock market gurus have been there all throughout the history of stock markets,but many have failed as tides change.So do your research and find genuine stocks before jumping in.
9.Avoid buying into illiquid stocks
Liquidity means volume of shares traded. What is the purpose of making profit if you cannot sell a share at the desired price? So always see the volume of shares traded to guage the liquidity of the stock before making the buy decision.
10. Be like a rock while trading
Emotions are the greatest enemy of a trader. Some stocks may give you profit, some others may give only losses. Don’t roll out a big party after making a decent profit, because a profit can turn into a loss very soon. When you are winning remember“This too shall pass” when you lose some money remember “This too shall pass”. These words will make you a great trader, who is matured and free of emotions.
Trade for happiness, don’t be greedy, be content with what the market gives you. Remember that you will learn more, and your failures will be the stepping stones to your future success.