How to Invest in Share Market?

Once you have decided to start investing in the share/stock market, then I would say you have made the wise choice to secure your future. You can do trading/investing in the share market. While trading refers to the regular purchase and sale of shares or stocks and investing refers to the purchase of shares and holding them for a longer period. To start your investing, you need to have the following 3 three important accounts.

1. Bank Account
2. Trading Account
3. Demat Account

👉All three accounts will be linked together for the trading process. We all know very much about bank accounts. Our savings will be deposited in our bank accounts. So let’s move on to the next one, Trading Account.

👉A Trading Account is a specialized account provided by brokerage firms that allow individuals or entities to buy and sell various financial instruments such as stocks, bonds, options, commodities, futures, and currencies. When you initiate a buy or sell order through your trading account, the necessary funds are transferred between your linked bank account and trading account. Similarly, upon the execution of a trade, the relevant securities are promptly credited or debited from your Demat account.

In case you buy 10 shares of Tata Steel (Each share price ₹110), then from your bank account ₹1100 will be debited and after the order is executed 10 shares of Tata Steel will be credited to your demat account in electronic form. You can see the holding positions in your trading account. Whenever you want to sell, you can sell the shares. Then the share value at the time of the sale, will be credited to your account.

👉Demat Account is an account that is used to hold shares and securities in electronic format. The full form of a Demat account is a dematerialized account. The purpose of a Demat account is to hold shares that have been bought in dematerialized form(converted from physical to electronic shares), thus making share trading easy for users during online trading.

• Step 1: To open a trading account, you need to approach a SEBI-registered brokerage firm. For example, Zerodha, Flattrade, and MasterTrust. There are lots of registered brokerage firms. You can compare their charges and service quality and approach them. Nowadays, you can open a trading account online. After your trading account is opened, you will be provided with, a unique user Id and password for the trading app/terminal. You need to log in with the ID and Password. You can change your password anytime for your security.

• Step 2: Analyze which shares you want to trade. If you are a beginner, try to gain more knowledge about trading and take risks as per your financial stability. It’s always good to do “Paper Trading” before taking real trades. Paper Trading is noting down your trades on paper and seeing if your predictions are correct or wrong. After enough practice and knowledge, you can start your trading. Always ensure that you have the requisite amount of funds in your account to purchase those shares

• Step 3: After moving to real trade, select the price at which you want to buy or sell a share. Wait for the buyer or seller to reciprocate that request.

• Step 4: Once the trade is complete, you receive either shares or money for the stocks that you have respectively purchased or sold.

There are various types of traders in the market. Some may do intraday trading, other may hold the shares for a longer term. The trading style always depends on the holding period and the risk-taking ability of the trader. Whether we are a trader or an investor, we must always keep in mind that, the market fluctuations are quite normal in the share market. To become a successful trader/investor, you should focus on risk management. Always define your risks and capital, then go for trading with full confidence. Happy Trading.