Stock trading tips for beginners

Most new investors wonder how to trade in share market in India. With thousands of companies listed on both, the Bombay Stock Exchange and the National Stock Exchange, finding the right companies to invest in can be a little overwhelming. This is especially the case with new investors or beginners who have started investing only recently. While you may set up a demat account for the purpose of buying and selling a wide range of investment instruments, you may need a few tips while going about your investments. So, if you are a beginner, this article is for you.

Beginners guide to stock market

Here are some handy investment-related tips for beginners

Define your investment goals across short, medium and long term: There are many reasons to invest money in the stock market. You may want to create a corpus six months from now, to raise funds for a vacation. You may be planning to buy a house in the next 3-5 years or may want to set up a retirement fund. Each of these above mentioned situations are examples of short, medium and long term goals respectively. Before you invest sums in a particular share, you must define the purpose of investment and the time frame when you’d need the funds. However, you need to remember that the stock market is volatile so you must diversify your investments.

Consider your risk tolerance: As a new investor, you need to first define your risk tolerance before you begin with online trading. You must start by investing smaller sums of money. This will help you understand whether you have the appetite to invest in high-risk scripts. While the high-risk, high-returns phenomena may be popular, you still need to start by investing smaller amounts in lower-risk scripts. As such, you should dedicate a small portion of your income towards stock investments and as you start getting the hang of how the market works, you can gradually increase your risk tolerance.

Don’t let your emotions get in the way of your judgement: A cardinal rule in the beginners guide to stock market is keeping your emotions aside. As mentioned above, the nature of the stock market is such that it fluctuates. This volatility can sometimes cause panic, especially among new investors. The moment the price of the stock falls, investors start getting nervous and take emotional decisions, only to regret later. Trading in the bull market is especially tricky. You may end up picking up the wrong shares, thinking that you will make money. But you need to remember to keep greed and fear in check while taking any investment-related decision.

Don’t follow the herd mentality: We are living in a time where we can get online share trading tips on the television and internet. Experts recommend the best shares to invest in on a daily basis on television channels. You may also be tempted to invest in a script because a friend or acquaintance suggested it. What you need to remember is that the advice may not work since your investment goals may not be the same as your friends’. Such strategies don’t work in the long run; so evaluate the advice against your goals before investing.

Share trading is something that you can learn only through experience. As a beginner investing in the share market, it is recommended that you employ the services of an investment company. You can set up an online trading account and get tips from a financial expert who understands your financial goals and risk appetite and can help you invest in the right investment instruments.

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