Article

10 Great Ways To Learn Stock Trading

Prasanth Menon

03 Apr 2018

The widespread misconception about the stock market is that it is a landmine of losses. Once you enter, there is no way you can get out after stepping on it and blowing all your money. Yes, it is true that you can incur a loss in the stock market, but it would be on account of you, having less knowledge about the share market and not because of the share market itself.

To become a successful investor, you must learn different ways to trade in the market. As the market has developed and is evolving, traditional methods of stock trading are not in the game anymore. Given below are the ten best ways you should consider to learn stock trading and be the master of your fortune.

  • 1. Hire a broker: First and foremost, you should hire a good brokerage firm charging a flat fee for getting familiar with the basic layout of the market. They provide research-based analysis of investments to their clients which will help you to take better investment decisions. The only person who can give you the best financial advice is your stock broker, and you must consider hiring a broker before entering the market or if you are constantly incurring losses.
  • 2. Read investment books: Every successful investor has one thing in common, they read as many investment books as they can. Trading in the share market requires a basic knowledge of all the aspects that can influence the prices of shares, and it can be gathered by reading books regularly. Once you start reading books, you will surely realize that the losses are getting reduced with every book you read.
  • 3. Read financial articles: Apart from reading books, another great way of gathering knowledge about the share market is through financial articles published in newspapers, financial magazines and on social media by a financial analyst or an institution. They will give you much-needed insight into the market and a particular investment so that you can better understand how the market operates and how you can make profits while trading.
  • 4. Find a mentor: Starting trading on your own can become complicated at times, and you would need a mentor to walk you through the investment process. The mentor can be a family member, your teacher or professor, your stockbroker or just a trustworthy person you know, who has the knowledge about the market and can guide you through it. All the traders who have tasted success in the market have had a mentor in their early days of investing.
  • 5. Study successful investors: To be able to be a successful investor, you must learn from the greats of the market. Studying their traits, their daily habits, their perception about the market and their investment procedure will help you to evolve as an investor. You should read books written by the legends of the market and about the things they did in the market to become this successful.
  • 6. Monitor and analyze the market: There is a tool method called Technical analysis which predicts the change in the market based on the available past data which helps an investor to cut their losses. As a beginner investor, you must try to monitor and analyze the market continuously by way of news or the analysis provided to you by your broker. This will help you to get a general idea of the demand and supply equilibrium and the prevailing market trends, and you will be able to cut your losses by a huge margin.
  • 7. Attend seminars and take classes: To further increase your financial knowledge, you can consider taking classes and attending seminars related to the share market. There are numerous forums and classes available for a beginner investor that are both free and paid. They can provide you with valuable insight into a particular investment you are considering investing in, or into the core working of the share market.
  • 8. Learn from your mistakes: Mistakes are the best way to make a person a better investor. You should never be discouraged if you incur a loss in the market but analyze the thing you did wrong in the process. If you can analyze and learn from the previous mistake, you will never commit the same mistake again. And no errors would mean fewer losses and higher profits.
  • 9. Identify your risk appetite: Look at your finances and determine how much you can afford to lose before entering the share market. It will help you to learn about the market in a better way. You can skip analyzing the investments which are out of your league and can focus on the investments which you can afford to invest in. You will be more comfortable in learning about the market when you have figured out your risk appetite.
  • 10. Contol the costs: Only learning about the basics of the market will not enable you to make profits through your investments. You must control the costs of your investment process as they can lower your profits significantly. Always go with a brokerage firm having a flat fee rather than a broker which charges commission. You can always consult your broker for other methods that can further reduce your investment costs.

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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 

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10 Great Ways To Learn Stock Trading

Prasanth Menon

03 Apr 2018

The widespread misconception about the stock market is that it is a landmine of losses. Once you enter, there is no way you can get out after stepping on it and blowing all your money. Yes, it is true that you can incur a loss in the stock market, but it would be on account of you, having less knowledge about the share market and not because of the share market itself.

To become a successful investor, you must learn different ways to trade in the market. As the market has developed and is evolving, traditional methods of stock trading are not in the game anymore. Given below are the ten best ways you should consider to learn stock trading and be the master of your fortune.

  • 1. Hire a broker: First and foremost, you should hire a good brokerage firm charging a flat fee for getting familiar with the basic layout of the market. They provide research-based analysis of investments to their clients which will help you to take better investment decisions. The only person who can give you the best financial advice is your stock broker, and you must consider hiring a broker before entering the market or if you are constantly incurring losses.
  • 2. Read investment books: Every successful investor has one thing in common, they read as many investment books as they can. Trading in the share market requires a basic knowledge of all the aspects that can influence the prices of shares, and it can be gathered by reading books regularly. Once you start reading books, you will surely realize that the losses are getting reduced with every book you read.
  • 3. Read financial articles: Apart from reading books, another great way of gathering knowledge about the share market is through financial articles published in newspapers, financial magazines and on social media by a financial analyst or an institution. They will give you much-needed insight into the market and a particular investment so that you can better understand how the market operates and how you can make profits while trading.
  • 4. Find a mentor: Starting trading on your own can become complicated at times, and you would need a mentor to walk you through the investment process. The mentor can be a family member, your teacher or professor, your stockbroker or just a trustworthy person you know, who has the knowledge about the market and can guide you through it. All the traders who have tasted success in the market have had a mentor in their early days of investing.
  • 5. Study successful investors: To be able to be a successful investor, you must learn from the greats of the market. Studying their traits, their daily habits, their perception about the market and their investment procedure will help you to evolve as an investor. You should read books written by the legends of the market and about the things they did in the market to become this successful.
  • 6. Monitor and analyze the market: There is a tool method called Technical analysis which predicts the change in the market based on the available past data which helps an investor to cut their losses. As a beginner investor, you must try to monitor and analyze the market continuously by way of news or the analysis provided to you by your broker. This will help you to get a general idea of the demand and supply equilibrium and the prevailing market trends, and you will be able to cut your losses by a huge margin.
  • 7. Attend seminars and take classes: To further increase your financial knowledge, you can consider taking classes and attending seminars related to the share market. There are numerous forums and classes available for a beginner investor that are both free and paid. They can provide you with valuable insight into a particular investment you are considering investing in, or into the core working of the share market.
  • 8. Learn from your mistakes: Mistakes are the best way to make a person a better investor. You should never be discouraged if you incur a loss in the market but analyze the thing you did wrong in the process. If you can analyze and learn from the previous mistake, you will never commit the same mistake again. And no errors would mean fewer losses and higher profits.
  • 9. Identify your risk appetite: Look at your finances and determine how much you can afford to lose before entering the share market. It will help you to learn about the market in a better way. You can skip analyzing the investments which are out of your league and can focus on the investments which you can afford to invest in. You will be more comfortable in learning about the market when you have figured out your risk appetite.
  • 10. Contol the costs: Only learning about the basics of the market will not enable you to make profits through your investments. You must control the costs of your investment process as they can lower your profits significantly. Always go with a brokerage firm having a flat fee rather than a broker which charges commission. You can always consult your broker for other methods that can further reduce your investment costs.