Many times it can be confusing to decide where to begin a journey from. Referring to experts who have through that journey might help a lot. Similar to them, your journey in the share market should also start with the right guidance and strategies. Here are 7 steps to start investing in the share market.
No matter what goals you want to achieve, it is a compulsion to have the right mindset before you can start achieving them. The share market is no exception. Right before you step into the share market, you need to clearly define your short-term, medium-term, and long-term goals. Once you are clear about them, you must develop the right mindset. You should have strong emotional control to avoid making impulsive trades to minimize your chances of mistakes.
Selecting the Broker:
Before starting to trade, you need a Demat account. It will be helpful if you find a broker who suits you. An ideal broker will be the one who provides you with all the facilities and services which you need and charges you reasonably for the services offered.
Demat and Trading Accounts:
Once you have selected your desired broker, you will need to fill an application form to open your trading and demat accounts. Some people may mistake demat trading meaning the same as stock trading but keep in mind that demat and trading are two different terms. These days it is more common to use an online trading app as it is more accessible and provides you with all the services on the go. Many traders also allow you to open a free trading account. When you apply for opening these accounts, first you will be asked to enter your personal details such as name, age, address, etc. The next step will be to submit documents for verification. These documents include your PAN card, identity proof, photograph, etc. Once verification is completed, you will have to complete your Know Your Customer (KYC), which can be either in-person KYC or eKYC.
Now you have to find the stocks in which you would like to invest. Make a list of these stocks.
From the stocks that you selected, start analyzing them one by one. Look for the stocks that have very low debt. Having low debt reduces the chance of the company going bankrupt. Next, look for the companies that have moats. Moat is a competitive advantage over other businesses which allows a company to create a monopoly in the market. Also, make sure to examine the management of the companies. The top management should be honest, transparent and should show confidence in the company.
Look and wait for the right time to buy a stock. Avoid buying when the stock prices are high. Buying stocks at moments when their prices are comparatively low can maximize your profits.
Similar to the buying point, the selling point also determines the amount of profit you make. Do not fall for huge profits if you are an active trader. As soon as the stock reaches your target price, sell it.
Following this strategy may not guarantee you extraordinary returns, but certainly, these strategies will minimize your risks. Having the right mindset will make you enjoy the trading journey. A trustworthy broker will assist you with research that you may want to do. Identifying the right stocks and spending some time on research will certainly increase your odds of making a successful trade. The result will be seen when you buy and sell at the right price actions.
Also read:- Why You Should Monitor Dormant Demat Accounts