While stock trading has long been considered a popular way to make a lot of money, beginners don’t often understand what exactly it is, how the market works and what makes share prices go up and down. For them, we have brought detailed Stock trading tutorials that will not only help them understand the term but will also aid them in their journey to become professional traders from a beginner.
In simple words, beginners can understand stock trading as a highway that leads them to profitable opportunities. However, the high volatility and risks involved in it remain the major drawback of the market. So, if you’re a beginner looking to place your first trade, these Stock trading tutorials will work as a boon for you. So, let’s first start with the basics.
What Is Stock Trading?
Before moving forward to understand stock trading, let’s first revise what stocks are. Stocks can be understood as units representing your fractional ownership in the company. Upon buying the company’s stocks, you become the shareholder. And when you buy shares and sell them at profits, this is what stock trading is all about.
In layman’s terms, Stock trading refers to buying a company’s stock at a low price, holding them until its value increases and selling them off when you think it’s the right time. And if everything goes as per your strategy, you will end up in profits or else ready to face losses.
How Does Stock Trading Work?
While trading typically means buying and selling stocks through a brokerage platform, there are other aspects to understand, like market types and stock exchanges.
There are two types of trading markets: Primary and Secondary markets. Let’s understand them in brief:
In the primary market, companies issue new shares through IPOs for the public. So, you’re buying shares directly from the issuer; there is no intermediary involved in it.
In secondary markets, you buy shares that are already issued to the public. So, the transaction happens between the buyer and the seller. And you’ll need an intermediary like a stockbroker through which the process becomes even more convenient.
Apart from markets, there is one more thing to consider, i.e., the stock exchange that oversees the activities of the market. Nearly every country has its own stock exchanges that work under their jurisdictions. Meanwhile, the major stock exchanges of the world are listed below:
- New York Stock Exchange (NYSE)
- Shanghai Stock Exchange
- Shenzhen Stock Exchange
- Bombay Stock Exchange
- National Stock Exchange
- London Stock Exchange
- Australian Securities Exchange
How To Start Stock Trading? Step-by-Step Guide For Beginners
Now that you have understood what stock trading is all about, it’s time to learn about how you can start stock trading and earn money. The following step-by-step guide will help you begin your journey as a beginner trader.
Choose A Reliable Brokerage Platform
Before getting started to trade stocks, the first and foremost thing to consider is choosing a reliable trading platform like InvestFW. Look out for its regulations, brokerage charges and user-friendliness.
Create A Demat Account
You must open a Demat account or trading account in order to start trading. Simply put, you cannot trade on the stock market without a Demat account. The Demat account functions similarly to a bank account, where you store funds for trading. The Demat account electronically holds the securities that you purchase.
Understand Stock Quotations
A stock’s price fluctuates in response to the latest news, fundamentals, technical analysis, and other factors. Learning more about stock quotations can improve your understanding of stocks and markets. This will assist you in determining the ideal price at which to enter or exit a trade.
Learn About Bid and Ask Prices
Having a good understanding of Bid and Ask prices is crucial in your success in the stock market. Bid Prices indicate the highest price you’re willing to spend on stock. Meanwhile, Ask prices represent the lowest price the seller will accept in order to sell the stock. Selecting the appropriate bid and ask prices is crucial for ensuring a profitable trade.
Have Technical & Fundamental Knowledge of Stock
To make trading decisions, research the fundamental and technical analyses of the stock. The fundamental analysis assesses the stock by determining its intrinsic value. It considers various factors, such as revenues, costs, assets, and liabilities. In the meantime, the technical analysis assesses the stock based on the stock’s historical price and volume chart to forecast the potential.
Understand Stop Loss
Volatility remains the share market’s inherent feature. Therefore, a novice must comprehend how to avoid suffering significant loss. You must understand stop loss before completing the transaction to minimize the loss.
Ask An Expert or Advisor
The stock market fluctuates unpredictably. Nobody can correctly forecast a stock price. However, seeking advice from an expert aids novice traders in making the best trading choices. It directs you toward the best decision.
Start With Safer Stocks
A significant financial loss in your first trade could make you feel less confident. So starting with stocks that are less volatile is a smart move. Such stocks have a higher chance of continuing to perform well under challenging circumstances.
Stock Trading Tutorials: Experts’ Tips To Keep In Mind
To a newbie trader, stock trading may seem like a place to get easy and quick returns or a place where all your invested capital is at risk. Along with having patience and good market understanding, you also need to have a proper plan to execute. The best way to create a plan is to get experts’ help.
In this part of Stock trading tutorials, take a look at some important and useful tips in order to succeed in this highly volatile market.
- Always choose companies with strong fundamentals.
- Avoid falling for emotional and sentimental decisions
- Know which sector or industry to trade in
- Start with a demo account before getting started with real money
- Never trust an unregulated stockbroker
- Try to choose liquid stocks
- Fix the entry & exit points
- Apply Stop-loss
- Don’t try to challenge or time the market
- Learn technical analysis
- Avoid individual stocks if you’re a newbie
- Be prepared for a downtrend
- Avoid short-term strategy
What Is The Minimum Amount To Start Stock Trading?
There is no fixed amount for stock trading; you can start with as little as $10. However, different stock brokerage platforms have set minimum deposit requirements. So, you’ll need to deposit the account minimums to start trading on the platform.
What Are The Fees Incurred In Stock Trading?
While most traders are aware of just commission charges, there are different other fees you should be aware of before starting to trade in the stock market. Here’s a list of charges & fees incurred in stock trading:
- Brokerage Charges
- Security Transaction Tax (STT)
- Stamp Duty
- Transaction Charges
- SEBI Turnover Charges
- Depository Participant (DP) Charges
- Goods & Service Taxes (GST)
- Capital Gain Taxes
What Are The Ways To Trade Stocks?
There are several ways to trade stocks, either through a stockbroker or a trading platform. So, let’s take a look at some of the popular ways to trade stocks.
Discount brokers provide a trading platform that allows traders to trade in a variety of markets, including stock. These brokers offer low-cost trading with reduced commissions & no hidden fees. However, the services of discount brokers are limited to just trading; you can’t access advisory services.
As the name implies, Full-service brokerages are those offering comprehensive trading, investing and advisory services all in one place. You get a long list of tradable instruments, along with expert advisors. However, these platforms are quite costly compared to discount brokers.
The CFD platform works conversely to Discount and Full-service brokers. Trading stocks through the CFD platform doesn’t involve buying and selling assets; instead, it involves speculating on the asset’s price movements.
As we are concluding detailed Stock Trading tutorials, hope you gained a good understanding of the topic. The stock market has long been supposed to be a good source of making huge money, but everything comes with a price, meaning the risks of heavy losses are always there. However, a good understanding and clear basics can help mitigate these risks to a great extent.
So, if you’re a beginner looking forward to starting stock trading, these tutorials would be quite beneficial for you. Apart from this, the best advice we can give you is to use a demo account before moving onto the live account. So, open your free demo account today and learn more about the market with InvestFW.
How Do I Start Learning The Stock Market?
There are several ways to learn about the stock market, which majorly include reading Stock trading tutorials, articles, and blogs, joining webinars & seminars, listening to podcasts and getting offline lessons from experts.
Can I Learn Stock Market Myself?
Yes, you can learn the stock market all by yourself by keeping updated with the latest market developments, reading articles, and blogs, joining webinars & seminars and watching youtube videos.
How Can I Learn Stock Trading At Home?
The best way to learn stock trading at home is to join webinars, where experts share their experiences and provides tips for beginners. You can also clear your doubts by raising your question.
Where Can I Learn Stock Market For Free?
Beginners looking to learn the Stock market for free can head over to any stockbroker and access their educational material. You will probably find articles and blogs that will help you understand the process and how the market works.
What Are The 4 Types Of Stocks?
The 4 major types of stocks include:
- Large-cap stocks.
- Mid-cap stocks.
- Small-cap stocks.
- Common stock.
Other common types of stocks include the following:
- Preferred stock.
- Domestic stock.
- International stocks.
- Growth stocks.
Can I Learn Stock In 6 Months?
Yes, you can learn about the stock market and trading in 6 months or even less. Once you get good knowledge, the next step is to testify it on a demo account, where the risk of losing capital is zero. And when you gain enough confidence, gradually start trading with a low amount.
What Type Of Stock Is Apple?
Apple is a large-cap stock and is included in the S&P 500. The position of this stock in Large-cap is determined by the company’s size and its market capitalization.
What Type Of Stocks Should A Beginner Buy?
A beginner should start with an individual stock; instead of investing in multiple stocks from different sectors. Starting with a low capital with also help them keep lower their losses.
What Is The Best To Invest In Right Now?
Considering the current market conditions and downtrend in the Crypto market, Stocks can be considered the best and safest assets to invest in right now.