How to Trade Stocks Online?

Nutan Gupta

21 Jun 2017

New Page 1

Illustration: Two friends, Anil and Neeraj, who also happen to be colleagues, live vastly different lifestyles. While Anil struggles to make ends meet with his salary, Neeraj enjoys a growing bank balance. This is due to the fact that he is proficient in stock trading online and through it, enjoys a second source of income.

Observing his financial success, Anil seeks to enter the online stock market. However, he has zero knowledge in this area. As a beginner, how can he start investing and trading in the Indian stock market online?

This is a common dilemma among young professionals today, who look towards building their wealth through diverse means, online stocks being the favorite one.

The Basics of Online Trading

Stocks are the ownership of a company, broken down into small parts, thus, anyone with a stock of a company has part ownership of that company. If you wish to trade stocks online, then start by opening a Demat Account (for storing your shares in an electronic form) and Trading Account (to place orders for the buying and selling of stock options).

All your shares will be shown systematically in your Demat account, so you don’t need to carry physical share certificates.

As far as India is concerned, BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) are the two big players where a major chunk of stock trading takes place.

Stock Up on Your Knowledge

To understand the workings of any stock market, it is important that you learn as much as you can.

These days, books, as well as various online sites and seminars provide a wealth of information for online stock trading. It proves to be a big help in learning the various features and tools of this dynamic platform. Books like ‘How to Make Money in Stocks’, ‘Market Wizards’, ‘Trade Your Way to Financial Freedom’, ‘The Intelligent Investor’ etc. are a great way to get a crack at the financial market.

Before opening an account, be sure that you know what you’re getting into. Share market is not for earning a quick buck or a get-rich-overnight scheme. It demands hard work and a lot of planning to achieve a monetary return.

After all, as Benjamin Franklin said, "An investment in knowledge pays the best interest."

Practice Your Trade

As soon as you feel comfortable with the market, start practicing by investing in small denominations. By doing this, you get a practical knowledge of the market workings and can start towards bigger investments.

For beginners, it is advised that they keep their investments diversified. Investing in a broad range of financial instruments lessens the risk of losing it all in one go. Eventually, with experience, you can calculate your risk/reward and invest accordingly.

Stay Updated with the Market

It is of utmost importance to keep a pulse on the market happenings to protect your investment interests. Financial news sites are a great source of current market trends and help you to monitor the markets each day.

Due to online trading, there is no need to depend on any trader or broker for buying and selling your stocks. It is convenient and you rely on your own intellect to make investment decisions. All in all, it is a good way of creating your own wealth.

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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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How to Trade Stocks Online?

Nutan Gupta

21 Jun 2017

New Page 1

Illustration: Two friends, Anil and Neeraj, who also happen to be colleagues, live vastly different lifestyles. While Anil struggles to make ends meet with his salary, Neeraj enjoys a growing bank balance. This is due to the fact that he is proficient in stock trading online and through it, enjoys a second source of income.

Observing his financial success, Anil seeks to enter the online stock market. However, he has zero knowledge in this area. As a beginner, how can he start investing and trading in the Indian stock market online?

This is a common dilemma among young professionals today, who look towards building their wealth through diverse means, online stocks being the favorite one.

The Basics of Online Trading

Stocks are the ownership of a company, broken down into small parts, thus, anyone with a stock of a company has part ownership of that company. If you wish to trade stocks online, then start by opening a Demat Account (for storing your shares in an electronic form) and Trading Account (to place orders for the buying and selling of stock options).

All your shares will be shown systematically in your Demat account, so you don’t need to carry physical share certificates.

As far as India is concerned, BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) are the two big players where a major chunk of stock trading takes place.

Stock Up on Your Knowledge

To understand the workings of any stock market, it is important that you learn as much as you can.

These days, books, as well as various online sites and seminars provide a wealth of information for online stock trading. It proves to be a big help in learning the various features and tools of this dynamic platform. Books like ‘How to Make Money in Stocks’, ‘Market Wizards’, ‘Trade Your Way to Financial Freedom’, ‘The Intelligent Investor’ etc. are a great way to get a crack at the financial market.

Before opening an account, be sure that you know what you’re getting into. Share market is not for earning a quick buck or a get-rich-overnight scheme. It demands hard work and a lot of planning to achieve a monetary return.

After all, as Benjamin Franklin said, "An investment in knowledge pays the best interest."

Practice Your Trade

As soon as you feel comfortable with the market, start practicing by investing in small denominations. By doing this, you get a practical knowledge of the market workings and can start towards bigger investments.

For beginners, it is advised that they keep their investments diversified. Investing in a broad range of financial instruments lessens the risk of losing it all in one go. Eventually, with experience, you can calculate your risk/reward and invest accordingly.

Stay Updated with the Market

It is of utmost importance to keep a pulse on the market happenings to protect your investment interests. Financial news sites are a great source of current market trends and help you to monitor the markets each day.

Due to online trading, there is no need to depend on any trader or broker for buying and selling your stocks. It is convenient and you rely on your own intellect to make investment decisions. All in all, it is a good way of creating your own wealth.

Have Referral Code?