How to learn the stock market?

CIOReviewindia Team | Wednesday, 05 August 2020, 10:57 IST

How to learn the stock market?

If you are thinking of investing in the Stock market but at the same time scared due to the myth that it's an intricate process, then you are at the right place. The stock market is not a tough subject to understand as you may think and anyone can start learning how to trade stocks. Moreover, with the advent of technology, there are a plethora of options available through which you can learn stock market basics to an advanced level. All you need is sincere efforts and perseverance and you can also easily learn the stock market. This article will take you through all the necessary steps that a novice investor should follow before investing in the share market.

Stepwise Procedure to learn the stock market 1. Open a Trading Account

The first and foremost step towards share market investing is to open a trading account, commonly known as a Demat account. You can either find a good online investment platform such as Groww, HDFC Securities, Sharekhan, ICICI and open a stock brokerage account there. Even if you already have a personal account, it's not a bad idea to keep a professional trading account separate. Other ways entail the offline method in which you need to consult a broker and then seek his help for opening a Demat account and then start trading.

2. Read a lot

Make a habit of reading, be it books or blogs on stock markets, investment strategies, etc. By systematic and continuous learning, you can get a firm grip on the subject and it will not seem tough eventually. Some of the renowned books such as “Basics of Financial Market” and “A Guide for Intelligent Investment” authored by Mr. Rajiv Ranjan Singh provides you a very lucid understanding of how the market functions. Furthermore, it is written in a simple language which makes it even easier to understand how the market and investment works.

3. Select your preferred sector

It may so happen that you are inclined towards any particular sector and you have a separate level of interest towards that sector. Try recognizing that favorite sector of yours so that studying and researching about the same does not seem like a boring idea to you. Be it any sector - automobile, pharma, IT, banking, FMCG, and so on. Try to figure out if any of the popular sectors is right up your alley and then start researching and investing in it.

4. Keep yourself updated

Always keep yourself up to date with every stock market news. Analyze the past trends and learn the pattern in which the share market functions. The stock market is affected by factors like political, economic, and global issues. Scrutinize how the market reacted to each and every event in the past. For instance, take a particular stock and check its performance for a period of the past 5 or 10 years. By sticking to this method, you can understand what all factors caused the price of the stock to rise and the causes that made it fall. If you are doing online trading, you can also keep yourself about the latest trends in the online trading world.

5. Find a mentor to learn from

A mentor cannot be necessarily a very successful investor, rather it could also be a family member, a friend, or even a coworker, that has a fundamental understanding of the working of the stock market and has been there for quite a while. A good mentor who is willing to answer all your questions, provide help, recommend useful resources to learn from, and keep spirits up when the market goes down. All successful investors have had their mentors during their early days.

6. Take online courses, live classes or attend seminars

Seminars can provide valuable insight into the overall market and specific investment types. Most seminars focus on one specific aspect of the market and how the speaker has found success leveraging their own strategies over the years. Some seminars are provided for free, which can be indeed a beneficial experience; one thing to be taken care of is the sales pitch that will almost always come at the end. Whatever is offered, just say no!

When it comes to online courses and live classes, be very careful while choosing the one. Go with a genuine and trustworthy course that does not burn a hole in the pocket and also provides a thorough knowledge of the subject.

7. Always try to be a good trader

Being a good trader not only means to make a lot of money but also means that you should consistently do a lot of good trades.

Now, what is a good trade? A good trade is not which makes money. A good trade is one that follows a judicious strategy. A strategy could be, that you would buy a certain stock at a certain price say, P0, and hold on to it until either you have hit price point P1 (higher), or P2 (lower, for stopping loss).

On the other hand, a bad trade is where the investor had not adopted any kind of strategy in the place, to begin with, and it was bought based on an impulsive thought or some random insight.

On a closing note

Stock market investment becomes easy with proper steps and a great strategy. What you need to avoid right from the beginning is making impulsive decisions. Decisions taken in haste while investing can take a toll on you later both financially and mentally. The best thing to do is to consult financial experts who can help you in your financial planning and provide you with personalized investment solutions. Seek their advice to make smarter investment decisions and obviously conduct due diligence of your own before making the final decision.

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