The stock market is a way to grow your money over time. You will get many investment options to participate in the stock market in India. There is high volatility in the stock market, offering more significant opportunities to profit, whether in the short-term or long-term. So, it is essential for beginners and experienced ones to learn tips and tricks to enter and move in the stock with confidence.
Before making any investment decisions, you will have to decide whether you would like to enter the primary or secondary market. Yes, you read it right. But before we understand these markets, let’s briefly understand the stock market. The stock market in India has two segments: the primary market and the secondary market.
Basically, the stock market is a place to buy and sell shares and other financial securities of companies and other organizations. Different stockbroking firms are members of the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange Limited (NSE). Stockbroking firms provide the facility of stock trading and investing on BSE and NSE by associating with their respective depositories like Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL). Simply put, BSE and NSE combine to form the stock market in India.
Over-the-counter (OTC) trading happens on over-the-counter markets. Over-the-counter is where you can directly trade with other investors, where there will be no involvement of any stock exchange. It means any exchange regulator will not supervise securities trading on the over-the-counter. In over-the-counter trading, you can invest in stocks, bonds, derivatives, etc. Over-the-counter trading happens when companies fail to fulfil the requirements to be listed on a standardized stock exchange. Although they can make their securities available to trade over the counter, they still have to submit specific regulations by the Securities and Exchange Board of India (SEBI).
Furthermore, the primary market is the market that facilitates the process of initial public offerings (IPOs), allowing the company offers its first issuance to investors. Not only companies and governments but also other institutions obtain funds by selling their debt and equity-based securities. Therefore, the primary market is known as the New Issue Market (NIM).
The secondary market is the market where investors or traders will buy and sell the company’s shares that are already issued in the primary market. Issuing companies will not involve in the secondary market. So they won’t involve any transactions; they won’t get any financing from the secondary market.
Tips & Tricks for Stock Trading
The following tips will help you begin your journey in stock trading:
- Open a Demat account to participate in stock trading and investing. This account is similar to a Bank account; you can store all your purchased stocks in one place. However, with a Demat account, you will not have to worry about the safety and maintenance of your investments.
- Open a trading account to buy and sell stocks and other securities. Without a trading account, it is not possible to trade any financial securities in the stock market.
- The stock market constantly fluctuates due to various reasons like War, Corporate performance, Government policy changes, Technological changes, Inflation, Interest rates, etc. Therefore, you must learn about these aspects to gain efficiency in stock trading.
- A bid price is the maximum price you pay to buy a stock. In contrast, an ask price is a minimum price you pay to sell the stock. Therefore, executing profitable trades requires determining the accurate bid and ask price.
- For thoughtful trading planning, you must learn fundamental and technical analyses. Fundamental analysis means a valuation tool by which you can determine whether a stock is overvalued or undervalued in the market. Technical Analysis helps determine price trends, volumes, and moving averages. With technical analysis, you can predict future patterns and analyse historical ones.
- Volatility in the stock market is a critical factor. You must understand the cause of volatility to prevent any major loss. To reduce any kind of loss, you can set up a stop-loss order that allows you to automatically buy or sell a particular asset when it touches a specific price that you decide.
- The share market is uncertain. It is challenging to understand what can happen next in the stock market. Therefore, you must take help from an expert to make the right trading decisions.
- It is hard to digest a significant capital loss at the beginning of your journey to stock trading or investing. So, you must make a wise decision to choose less volatile stocks.
To execute profitable trades efficiently, you can try Kotak NEO by Kotak Securities, one of the largest stockbroking firms in India with 3+ million customers. Using this app, you can invest in a lot of investment options such as Stocks, Mutual Funds, SIPs, ETFs, F&O, Currencies, Commodities, etc. Moreover, you can keep your eyes on BSE, NSE and various indices on these major exchanges. Moreover, with Kotak NEO, you can open a Demat and trading account online without any hassle.
Demat apps are all about storing your investments safely and securely in one location. Furthermore, it is challenging to invest in the share market. So all you need is to gain adequate knowledge of the stock market and open a Demat and trading account. You can effectively execute your trades using this modern app ‘Kotak Neo’ by Kotak Securities. Get the easy way of exploring, investing, and trading in the top companies you like with Kotak NEO.