As a beginner, it is vital that you make a smooth entry into the markets for early losses can discourage one from entering the markets again. The above points will ensure you are ready to make your debut in the share markets. The share markets are one of the best places to invest your money. You see higher returns compared to mutual funds or other investment options such as Public Provident Fund (PPF) or National Pension Scheme (NPS).
For young professionals, indulging in online share trading is an excellent move to create wealth and set themselves up for the future. If you are interested in trading, here are a few useful tips for beginners in the share markets.
- Get A Trading and Demat Account
A trading account and a Demat Account. These two are paramount for beginners who wish to enter the share markets.
One can visit a Depository Participant (DP) (find the list of registered DPs at the websites of NSDL or CSDL) to open these accounts. The procedure to open them is simple and will not cost you much.
- Choose A Broker
You can choose between a full-service broker and discount broker.
A full-service broker is a traditional one who offers a gamut of services such as placing your trades, investment advice, portfolio management, financial planning, and retirement planning among others.
A discount broker is the new age broker. He or she offers high-end trading platforms where you place your trades. It’s online trading at its best.
- Know Your Risk Profile
You invest money to make more money. How much to invest? That is the golden question. As a beginner, you should know how much risk you are willing to take on.
It is unwise to invest all your savings because there is a possibility of you losing every penny of it, thanks to market volatility. Start small, invest little by little and grow step by step. That is the key to success.
- Understand The Workings
You cannot understand advanced quantum mechanics if you do not understand basic Physics. The same is for share trading. How do you expect to make millions when you do not know the workings of the markets?
Invest time and effort into the learning the market mechanics. Things to learn include:
- How market prices fluctuate?
- Different buy and sell strategies
- Market jargons
- How to read balance sheets?
As you learn more, you will understand better, and take sharper decisions.
- Trade With Your Money
This is one tip every trader needs to know. Any amount you invest, it needs to be yours. You cannot risk going into debt because repayment is hard. You can win or you can lose in the markets but make sure you do so with your own money.