Interested in trading, but have no idea how to get started? Don’t worry. I’ll explain everything you need to know to begin trading in the stock market.
In order to start your trading journey, first you must have a Demat account. it is a trading app where you can buy and sell stocks of any company. In India there are lot of trading apps where you can open your Demat account .you have to choose a best trading app for you ( Zerodha, Upstox, Groww, 5paisa), then you can start trading in your favorite stock or your analyzed stocks. But these trading apps charge you some amount in the form of brokerage but it also depend on what type of order you are placing ( intraday, delivery, f&o). and these charges also vary with different Demat account.
What is Trading?
Trading is buying and selling the securities such as stocks, bonds, commodities, currencies, and other financial instrument over a short period of time. In trading, you will make a profit from the short-term movement in the prices of any securities. for selecting good stock you will see the chart-based technique and short-term patterns in prices .this is called technical analysis.
example:- you buy a stock of ABC company at 100rs and due to market volatility or any news ABC company price goes up to the 150rs within 2 or 3 days. so you can sell those stocks and make a profit.
What is Investing?
It is different from trading, for investing you will follow a buy-and-hold strategy. you buy stocks or any financial instrument and keep it for 3 to 4 years or even more sometimes .for investing you will select those companies, which you expected to grow in long term. for investing you will do fundamental analyses.
The aim of the investor is to create a balanced or diversified portfolio of different stocks that give returns through an increase in value of invested amount as well as give dividends.
Types of Trading.
Mainly there are two key forms of trading: short-term or long term
we will categorize trading on basis of the time period, there is intraday trading, swing trading, and delivery trading.
1.Intraday Trading
if you buy and sell stocks on the same day is called intraday trading. it means that you buy a set of stocks on a day and you sell those stocks by the end of the same day in intraday trading. it is also known as day trading.
In intraday, you will get a benefit of margin from the broker. it means if you buy stocks of any company so you just have to pay 20% of that company per share price. rest of the amount paid by the broker.
Intraday is less risky because it is for the short term, but it can become risky when the trader uses too much margin money.
2.Delivery Trading
you will buy a stock and hold it for a longer time like months or years. it is a form of long-term investment and it is considered one of the most secure ways of investing in the stock market.
unlike intraday trading, delivery trading does not allow the usage of margin. it means, In this investors make the complete payment by themselves.
for delivery trading, you have to do a proper fundamental analysis of the company in order to select stocks for your portfolio, because you are keeping those stocks for a longer time period.
3.Swing Trading
The major factor that differentiates swing trading from others is the time frame. in this trader will hold the stocks for more than a day or even for a week. and try to capture a certain movement in the stock price.
For swing trading, traders must be able to understand the trend of prices in the market. it will mainly focus on the chart pattern, or overall technical analysis to select stocks for swing trading.
Final Advice