Stock trading 2021 is not a phenomenon; it’s a feeling that grips traders, investors and brokers together in a thread of joy. When a transaction initiates in the market, a passionate trader would often feel nervous, excited and curious at the same moment.
For reaching that level of existence in the stock market, a trader needs to acknowledge the market from various fronts besides the degrees of profits and losses.
An individual who develops an understanding and sees the stock market through the prism of technicalities, trading becomes fun. Let’s discuss it further.
Stock Trading 2021 Anecdotes
You can classify the market into two forms: Unorganised and organised.
Such markets do not have an application of rules or guidelines. They work impromptu and react to the situations or movements and change in trends. One does not need to adhere to any terms and conditions even if they exist, mandatorily. There is no regulatory body supervising their activities. Hence, trading stocks in such circumstances pose risks. You are vulnerable to cheating and deceits.
Here, one has to abide by rules, guidelines and discipline of a regulatory body, which develops faith in traders. It establishes transparency and legalises transaction of funds. Every entity that operates within the stock market has to adhere to scrutiny and terms set by authorities.
Stock Trading 2021: Best brokers
In the recent past, the online trading market is easing, influencing more and more investors to come on board for trading. It is hassle-free and requires a few documents to create an account on brokers like Global Trade ATF, Investlite, HFTrading, 101investing, and ETFinance. These brokerage firms have licenses and registrations and offer the best platforms which simplify trading.
Moreover, several regulatory authorities and bodies keep an eye on their activities, which affirms buyers and sellers’ trusts. You do not have to think again once you create an account with them. They offer multiple indicators, signals, offers and features for enhancing your stock trading.
Stock Trading 2021: How to Trade Stocks?
Stock trading is about understanding equities and then initiating selling, purchasing and holding shares of different companies. Like other financial markets, traders depend on fluctuations and frequencies in the bazaar. Investors usually set goals; after meeting them, either they sell their stakes or purchase them for the long term.
Stock trading has layers because each company in the listing has its fundamentals and technicalities which one should study. It is not like gold or bitcoin or other financial assets, which are wholesome. Here, every conglomerate has to pass a criterion before getting listed in a stock market.
Trading of stocks requires knowledge of fundamentals of a company, products or services it lists out or manufactures. A trader should know that the share market does not work as per the convenience of investors. There are stakes involved, and then the company’s performance in the retail market makes a difference.
Popularity and word of mouth generate footprints and volumes, which increases the estimated value of a stock. However, for reaching there, the quality of products and services should be the best among competitors. There may be several e-commerce sites across the globe, but Amazon stands out for its qualities, vision and expansionist idea. It is delivering people what, where and how they want their items or goods.
There is an X-factor which makes a stock stand out of the ordinary. A learned trader would understand in and then invest in it.
Stock Trading 2021: Myths
Similar to superstition surrounds optimism and negativity, myths are always near the facts as imposters. They create unnecessary fear and cast vestiges of self-doubts while trading stocks. Here are the topmost myths which require busting:-
a)Stock Market is akin to gambling:-
There is no denying that we have heard such stories and talks from people close to us or those who do not trade that the stock market is nothing but gambling, which causes loss of money and ethics. But it does not have an iota of truth.
Some folks believe that the stock market spreads through misguided advice, though well-intentioned. As you know, gambling has an association purely with luck and your fortune. You require money to gamble. On the other hand, the share market is one of the most significant financial and regulated industries, which walks on a set of rules designated by governing bodies.
There are chances of winning and losing in gambling. You cannot hold your share or hedge or average. Also, one does not have a scope of withdrawing money after investment. But investment in stock markets drives through various factors. The current economic condition, history of the market, information emanating in news and reports from other channels and sources.
Furthermore, the growth rate at which the company is performing also translates in the conviction of a trader. These factors have a backing of ample scientific research and adequate shreds of evidence, unlike gambling which requires only funds for starting.
You can predict the share market based on the elements, whereas gambling is all about praying for luck.
b) High-Risk bags bigger returns
It is a half baked truth that high risk will always get you higher returns. It happens, but not always. You may even lose your investment if there is no backing of strategies. If a trader is unsure and invests funds blindly in the falling market, he’s bound to lose all the deposit.
It is only when the market is favourable and growing in the direction of your whims and fancies; you will draw great returns on huge investments. Had it been true, all traders and investors would invest a big amount and draw greater gains every time. However, the cause and effect relationship is just a dream.
In reality, you are as much susceptible to losing your money as much as winning in the share market during huge investments. However, strategies and learning the tide of the market can salvage some pride.
You need patience, research and observation for funding big in the market. Also, you should trust pieces of advice of experts and learned trade pundits before investing. Additionally, keep in mind, the stalwarts of investors do not necessarily invest larger amounts in the market. Low-risk investments can be as much beneficial.
c)Only experts should invest in stock markets
Trading in the stock market is a privilege, according to some people. It is a myth that concerns several potential investors who think only experts have an exclusive reservation for trading in the share market.
However, it is a myth which is getting propelled out of nowhere. Instead, it is a democratic and secular place where anyone with funds can come and start trading without reservations. You do not require a special status or put in a category. Everybody has equal chances for wealth creation.
Perhaps, you need a better understanding of shares before you invest in a company’s share. One should check how fundamentals are and other factors. As per your risk appetite, you must identify stocks that fit your pocket and idea of investment. The process of learning and accuracy takes a lifetime. So, you have to trade continuously for reaching there.
d)Stock market is a playing field
Extremes of any type come filled with perils. When false equivalence of the stocks market with gambling is wrong, calling it a cakewalk is not right either. The share market requires preparations prior to investing in it. Even those people who are doing it for decades see the market trend and movement before putting their funds.
Trading in a stock market is a convoluted process, which needs the distinction of your attention span and keen interest to throw yourself in a territory of uncertainty. There are consequences; hence you cannot dabble around and think of no error.
It is okay to show an inclination toward what your friends or families have to say about stock investments. Sometimes, their feedbacks reap great rewards. But on a larger scale, you should do some fair bit of research in the market and must practice SWOT analysis.
You should gauge and vet the market and based on experts’ recommendation to formulate strategies that supply you with clues of investments. In the internet’s age, you do not have a dearth of plans and research materials. Surf and scroll around to see reports, reviews and information about a stock and then create an account for trading.
e)Any stock that fall will regain the position
There is a misconception that some traders or people foster that if a stock touches the bottom, it will rise like a phoenix. It is not true. However, some would do, but if you invest in a penny stock, you might end up losing all your investment. The lack of public consciousness leads to such thoughtful processes. It stems from a lack of awareness.
Lehman Brothers is the prime example one may cite. It was a fantastic stock, but due to some grave and unforeseen trouble that people avoided for a long, led to the company filing bankruptcy. So, be vigilant and always try to invest in blue-chip shares for better outcomes. Netflix, Tesla, Google, Amazon, Microsoft etc. are among the best stocks globally.
Also, traders who think that trading or investing in a stock that is 52-week low is a good buy. It may so happen that it plunges to the bottomless pit.
You have to resort to technical analysis before investing in the market; else it will be a cardinal sin. If a bigger company slides from a higher position and small company hikes; it is advisable to invest in the former because of the fundamentals.
f)Stocks will eventually fall after rising
It may happen that correction follows in every market. Even in life, you see a graph; there are ups and downs. But not in stock trading, it is not always true. You can use Berkshire Hathaway as an illustration. A few decades back, the company’s rate per share increased to $17,250, without witnessing a fall. On December 24, 2020, it stood at $ 3,36,700.
Investors who waited for the legit correction could not see any with it. Hence, you cannot foster a pre-conceived notion that the share would slip because others did. Every listed company derives benefit from the business it does.
g)Knowing less will do
The myth that you can capture the mood of the market with less or no less knowledge is absolutely suicidal. You do not take a leap of faith in the share market but keep every step with the utmost attention and sincerity, reading the past and present scenario. The adage, little knowledge is dangerous’ applies perfectly here.
It is vital that investors should know what they are doing with the money they’ve got in their hands. They may repent after taking a route that dupes their money. So, they should come up with proper homework and study of a company they want to invest.
Anyone who lacks the knowledge or time to gather information should seek experts’ services or employ a learned broker for researching and investing.
Stock Trading 2021: Know process
If you’ve never tried your hand in the stock market and are enthusiastic about the financial market, who has the penchant for trading, then the following steps will help:-
i) Start by learning and researching
Due to the involvement of your hard-earned funds, we will recommend you to read a lot about the stock market and then decide which sectors you prefer for making the first investment. The stock market is a vast field which envelopes multiple sectors and domains, including:-
- Information & Technology
- Gems & Jewellery
- Paints and Pigments
- Personal Care
These are a few illustrations; there are miscellaneous others that have a listing on several exchanges across the world.
Look into any of the sectors and channelise the knowhow. You must cling on to the stock that your study, advice from experts and instinct tell you. Once you are sure, hop onto the next level, which is finding a right broker.
ii) Find a broker
As things are organised, and stock trading is happening through online mediums, a trader should research about a legitimate broker. You can read reviews, ask your friends, families and colleagues who have been trading for a while before selecting one. Experts recommend brokers like Global Trade ATF, ETFinance, ROinvesting, 101investing etc. that are living up to stock trading standards.
Remember, the broker you find should have a licensing, registration number and a regulation from the renowned governing authority. If these parameters meet, lock your step.
iii) Open an account
After settling the discourse of the brokerage firm, you can now open an account. Many brokers offer different types of accounts, including, silver, gold, platinum, professional, Islamic and demo. Several brokers are offering account opening facilities in a few minutes. However, it does not mean you have to deposit money mandatorily. It means you are getting ready for investment and trading.
iv) Set budget
Be particular about your budget and do not go over the board. In a basket of stocks, make sure you do not allocate more than 10 per cent to your every stock in a portfolio. It helps in managing perils of the market. Follow these guidelines:-
- Do not get too excited and put your money on one stock.
- Invest only when you can afford to lose that much money.
- Leverage only when you are sure about the rise in the market.
- Hedging is important when there are corrections in the stock market, to buy a share at lower than its estimated value, but be sure about it first.
v) Limit orders and market orders
Once you get your brokerage account and allocate the required funds, you’ll get multiple trading stocks options. Choosing out of them won’t be easy. However, your studies about the market help here to get things right.
In limit orders, you set a limit for purchasing or selling stock and when it rises or falls to a specific price. When the value hits the threshold level, the orders either get sold or bought. However, in the market orders, you buy or sell impromptu as the rates are conducive for you.
vi) Try with a demo account
Money that you earn is important to you. So, it is better to gain some experience of the market and platform by using a demo account. These days almost all brokers offer demo accounts with a similar experience and environment that of a real one.
Before putting up real money in the accounts, use virtual ones and learn the basics and tricks to trade stocks.
vii) Set a benchmark
It is vital to set a benchmark target, based on that you can track the market and invest in different stocks. Create small goals and climb toward them steadily. Measure and vet what things are going wrong and needs correction on your part. See, which types of strategies are getting you closer to the desired results and then lock them.
For making stock trading 2021 desirable, make sure you study and research about the market and its theatrics. Please do not rush into any stock; observe its fundamentals and check reports. See news and collect information through various resources until you are sure about it.
After getting convinced, toss your money in the stock and hold it for a while for making gains. In the beginning, do not risk a lot and go slowly, and see the magic unfold.