Today, stock trading has become easy. You need an internet connection, bank account, some cash in your account, and a computer or mobile device. Around 60 years ago, the stock market scenario was challenging. Now, there is hardly any paperwork needed or physical appearance. Buy stock sitting at home or on the go in a couple of minutes.
Unlike stockbroker, online trading allows you to make decisions. Reduction in the transaction costs, conduct trade at your convenience and avoid traditional brokerage bias. If you are planning to enter the stock market let’s learn the fundamentals before entering and how to buy shares online.
Before entering the online stock market
Read & research
The first step is to identify the right company share and for this you need to do some research. You will come across multiple blogs and websites, where you can get enrolled for tutorials.
Beginners can read blogs on websites like Money control, Trade Brains, Economic Times, etc. You can even read books written for novice stock market investors. Learn the basics to begin on the right foot. Even get familiar with how to follow the stock market, trends, fluctuations, etc.
Sharpen your financial skills
Good financial skills are necessary for stock market trading. Understand the fundamentals before you enter the trading arena. You will come across jargon like P/E ratio, EPS [earning per share], P/BV, Book Value, ROCE [return on capital employed], ROE [return of equity], and debt/equity ratio, etc. Therefore, understand them thoroughly, and learn to analyze your stock trading options.
Practice on a dummy portfolio
Create a dummy portfolio with stocks you are interested in. The portfolio is a collection of stocks from the same or different sectors. It shows home many shares you have. A good portfolio can be defined as more profits with reduced risks. You can follow stocks you are interested in for a couple of weeks and practice on a dummy account before trading with real money.
How to buy shares in the stock market?
Basic needs to buy shares in the stock market include –
A stockbroker – You will not go have to go to the stock exchange for buying or selling the shares. Stock exchange members are legally allowed to buy or sell shares in the stock market. They are called brokers.
Each broker is registered under SEBI. You will find many brokers and sub-brokers to choose from. For example, Sharekhan, Zerodha, 5Paise, ICICI Direct, and Kotak Securities are popular online brokers.
Saving account – You will need a savings account in a bank to handle the financial aspect.
Demat and trading account – Opening a Demat account is easy. Banks offer a 3-in-one account that means Savings+Demat+Trading. You just need to fill a few forms just once. If you open the 3-in-one account there will be no need to find a broker.
Online futures trading and futures options trading in combination with different stocks, ETFs, and options are available in online stock market in India.
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