Everyone wishes to try their luck in share market. Some succeed, some lose everything. The later creates serious damages in one’s life. To avoid such loss, it is always recommended to research a lot before you start buying and selling shares and securities. Once you decide to take control of your investments rather than appointing a financial advisor, you should know the reality of how the share market industry works. It is then, when you shall have full satisfaction of having a control over your destiny.
There are two simple rules:
1) Trading Plan – Trading plan is deciding what you want to trade in, your goals in terms of profit, your tolerance risk and how much time you shall devote on trading on everyday basis. The same should be decided by being realistic. For example, you decide to trade all day but you have no capacity to sit in front of computers for more than 2 hours. Such goals never give results.
2) Lose small, win big – The reward to risk ratio should be 3:1 on every potential trade. Knowing that share markets have fluctuating nature, and there may be a time when you might not earn shall help you in future. Not every time can someone hit a home run. There are times when you lose. So not everything you have should be invested in shares and also keeping hope that time shall change and you will earn again is what is to be understood.
Before starting, an investor needs to open a Demat Account with a broker and fulfill all the conditions of trading in securities. After a successful start of opening the account, he should have the basic knowledge of economics. Here the requirement of knowing the demand and supply rule is a must. When there is a higher demand of the buyers to buy a share than the sellers of selling the same, the price of that particular share shall raise and visa versa. Just a simple understanding of this shall prove to be a base for every other share as the rule is the same for everything which includes buying and selling of stocks, real estate, options, bonds, currency pairs, commodities, etc.
To open a Demat Account, following steps should be considered:
Step 1: Select a Source (Depository Participant)
Step 2: Fill in the Demat Form and submit the required documents (PAN card copy, aadhar card copy, passport copy, 2 passport size color photograph and last six months bank statements)
Step 3: A person shall come to verify the address in person from the office of the chosen depository participant. On confirmation of the same, he shall provide a user id and password for your Demat Account which will be linked to your bank account.
After the demat account is opened, you can transfer money from your bank account to your demat account. Once there are sufficient funds, you can start purchasing and selling shares and securities by logging in your demat account.