Everyone wants to secure his future financially. For that, people invest in different investment options such as real estate, gold, and the stock market. It has become a trend that people have moved to the stock market because of the returns it gives. But it is always said, great reward comes with great risk. So blindly investing in the stock market may lead to losing your money. Here we will provide you with basic information about the stock market.
What is the stock market?
A stock market is a place where securities of public companies are to be listed for an initial public offering or regular activity of buying and selling of the securities.
These securities are to be listed on a stock exchange which are institutions governed by a defined set of regulations. NYSE(New york stock exchange), CBOE(Chicago board options exchange), and NASDAQ are leading stock exchanges of the US whereas NSE(National stock exchange) and BSE(Bombay stock exchange) are two national-level stock exchanges in India.
These exchanges are primarily known for trading in equity or stock of a company. Trading in debentures, derivatives based on commodities, and currencies also take place in these exchanges.
As multiple market participants in the form of buyer and seller take part in regular activities of exchange it ensures that the deal takes place at fair prices. Earlier, stock market activities are used to be done through paper but now everything is done electronically which ensures minimum operational risk.
How to Open Account in Stock Market
To Invest in the stock market a person is required to have a bank account, trading account, and a Demat account. The work of a trading account is to buy and sell securities in the stock market while the Demat account is used to store the securities in electronic form.
As we deposit money in the bank account, the same way securities are deposited and stored in a Demat account. A trading account can be opened with the stockbroker or a brokerage firm registered with SEBI. These firms charge brokerage fees for providing the facility. Demat can be opened in any bank permitted to provide this facility.
How to invest in the stock market
Once you have these three accounts, you can invest in the stock market. You can trade online or call your broker to buy or sell securities on your behalf. It is not easy to understand the flow of the market so the general recommendation is given to every new investor that always discusses with your financial advisors before Investing in particular stock or security.
Before Investing in a security one must study and understand the risk underlying it and factors which determine the direction of the share or security.
Shares or Mutual funds
There are thousands of companies listed on the stock exchanges you can buy and sell shares of. However, You can invest in mutual funds instead of directly buying shares of the company. Mutual funds have less risk compared to shares because these funds are managed by the stock market expert(s) having experience and sound knowledge. If you are a beginner and don’t want to put your money at risk but expect good returns then the mutual fund is the best investment option for you.
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Tips on Share Market Investment
Don’t Focus On Positivity
The honest truth about day trading swing trading the stock market, really anything. You need to focus on the negativity. And as individuals, we don’t desire that. We want positive of we always want hey, good emotions, and that’s totally fine. Right? That’s actually very healthy, but that’s why trading can be so difficult. Because what we normally want from a human, from an emotional perspective, is not what we need and we need some negativity. So that’s why I’m starting off kind of on the negative note, talking about failure and how most people fail.
But here’s the other thing is, and this is quite frankly a very big fact. Alright, so most people leave yet most people because they want the exciting stuff to fail.
Don’t Lose Money
Buffett’s clearly a very bright person, but you always got to be careful. Don’t take quotes out of context and what they’re referring to. And this is definitely not a quote that’s being referred to as trading. Whether you like I said, you’re day trading or swing trading, trading Futures Trading crypto. This is not what you should be applying the true Rule and why it’s number 1 is losing money. Okay? Lose money, but let’s add in a word here “wisely”.
Now, what exactly does wisely mean in a way that shows experience, knowledge, and good judgment. So we want to lose money in a way that shows experience knowledge. The goal is hey, you know what? Let’s lose money wisely. And then all of these other rules are going talk about are going to force you to focus on the experience. Knowledge and good judgment of losing money.
Ignore The Ego
So what is ego? First focus on this one, a person’s sense of self-esteem, how they feel about themselves. There’s it’s a fine line you want to show up in the markets, whether you’re a beginner or you have experience and you know, we’re taught gonna pay. You know you got to have confidence, gotta believe in yourself. You gotta go. Go for it. Have faith in yourself. You got to pretty much put yourself as you know, I’m a big deal. I can do it. And that’s great in many situations in life. However, in trading, not so good because you will be wrong. And not only will you be wrong, but you will also need to admit this.
So you gotta admit the fact that you’re wrong. So if you’re somebody that struggles or just, you’re so stubborn, you just refuse and meeting, you are wrong. I mean, if you’re having a discussion with somebody and you know just keep Arguing and arguing. If you have a true point, that’s fine. But if you’re just arguing for the sake of admitting that you know, what? Maybe I am wrong here.
So if you’re one of those people then all I can really tell you are trading is not for you. Literally, run away from this business because you are going to get crushed, you will get crushed.
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