The terms ‘stock market’ and share market are frequently used synonymously. The stock market is a marketplace where buyers and sellers can transact on publicly traded shares at particular times of the day. By selling shares of stock, the stock market assists investors in raising money. The stock market helps firms raise money to sustain their operations by selling shares of stock, while also generating and preserving wealth for individual investors by offering investors ownership stakes. Using an online stockbroker is the simplest way to purchase stocks.

You can quickly purchase stocks on the broker’s website after creating and financing your account. Other choices include purchasing shares directly from the company or utilising a full-service stockbroker. The government meddles in the process of the company issuing the shares.

Types of Stock Market

Stock markets can be further classified into two parts:

1. Primary Markets

Primary market is also known as new issue market. In this market new securities are issued. Companies float new stocks for the first investors. The investors directly purchase shares from the company for the investment purpose. In return companies raise funds for their business through these IPOs in this primary market.

2. Secondary Market

The secondary market, on the other hand, is described as a location where investors trade issued shares. Securities offered in the primary market can almost be instantly sold in the secondary market, thus providing high liquidity. The initial investors who purchase IPOs or Bonds in primary market, want to sell their stake in the company, they can do it in the Secondary Market.

Basic Difference Between Investment and Trading

1- Investment in Share Market

Stock market investment has gained momentum in recent years specially following the digital boom and the involvement of online brokerage firms. The handsome return generated in the stock market have recently attracted millions of Indians specially the youth. For decades Indians had a stigma about share market. They considered it as gambling. But now the scenario has changed. The proof is that thousands of Demat accounts are being opened every day. But in investment, the investor can wait and watch the trend of the market for a longer period. Finally when he sees the profit, he sells his shares. This is safer than trading. While investing money, the investors sometimes waits for years and whenever he needs money, he sells his shares and makes profit

Types of Investment:

1- Short Term Investment

While going for Short Term Investment you buy and sell shares within few months. The purpose of investor is to make maximum profit in minimum time. But in this type of investment, you should be very vigilant towards ups and downs of the market. You are supposed to be watchful every day.

2- Long Term Investment:

 Long Term investment means buying the stock and holding it for years for the investment purpose. This type of trading is safe and secure. You can invest money for years to make profits. Whenever in future, you need money you can sell those shares, they will definitely pay you.

Trading in Share Market

In trading the trader buys the shares and as soon as he finds the price rise of the stocks, he sells them. Sometimes if price is going down and there is no chance of price rise, in that case the trader is supposed to sell the stock  before the closure of the market. You must square off all positions before the closure of the market. Here in intraday trading the broker provides margins in form of funds to increase your exposure in the stock market. It enables you to buy or sell some additional number of stocks.

Types of Position in Trading

Long Position: If an trader has bought the shares, it means he owns those shares. This ownership of shares is called long position.

Short Position: On the contrary in short position, the trader owes the shares to some other entity and he does not own the shares, it means he is said to have short position.

Pre-requisites for investment in stock market by yourself:

  • Computer/laptop/mobile
  • Wi-fi/internet connection
  • PAN card
  • Aadhar card
  • Bank account
  • Trading account
  • Demat account
  • Cancelled cheque
  • Bank statement
  • Passport size photograph

Basic steps for beginners for trading or investing:

  1. Open a trading account: For buying or selling you must have a trading account. Through this account you can place orders for buying and selling shares.
  2. Open a Demat Account: This is an online account where the shares purchase by trader are stored. This account can be opened with any SEBI registered broker. You are needed to provide  above mentioned essential documents to the broker as PAN, Aadhar, Photograph, details od your bank account, cancelled cheque etc.
  3. Choose an investment advisor for guidance who can advise you about your strategies of buying and  selling of shares.
  4. Figure out the reason and duration for investment. You can suggest your plans to your advisor and on the basis of your suggestions, he can help you in buying and selling shares.
  5. Choose the type of investment in which you want to proceed. The options are long term investment, short term investment, IPO, Bond, Mutual Fund etc.
  6. Choose the stock options where you want to invest: This is not very easy for beginners. It needs a thorough research and study of the market. Keep a close watch on market trends. Select only those stocks which have a track record of very good performance.
  7. Monitor the market regularly after investing money in stock. you need to observe each ups and downs of international market regularly.

Share Market Tips for Beginners 2023

  • For beginners, it is essential to start with small amount. Only after understanding the nuances of the share market and developing confidence, you should go for large investment.
  • In the beginning of investment in share market, you should diversify your portfolio which means you should buy shares of different company of different industry.
  • You should invest in blue-chip stocks which means the stocks having financially good track record.
  • Never believe in free tips or advice of any friend or colleague . Also avoid blindly following the crowd. Take your decisions yourself.
  • You should understand the logical expectations from the market. No miracle can be expected.
  • Always follow the strategy with proper discipline. Never get distracted with the immediate up and down of your stocks.
  • Try to increase your investment consistently whenever you get a new and good opportunity of investment. This will enrich your portfolio.
  • Read regularly about the market. This learning will help you in taking decisions of investment or selling of shares. You can decide yourself where to invest.

Leave a Reply

Your email address will not be published. Required fields are marked *