How to Buy and Sell Shares| Make only Profit | Stock Market for Beginners

How to Buy and Sell Shares| Make only Profit | Stock Market for Beginners

 See, if you are like me then you think about earning money all the time. So that you can get a good education, secure your family's future and also save enough money to travel, enjoy life. And I am guessing that is why you are interested in the Stock Market. 

But the problem is, whenever you go to any financial expert, they will give you the same advice that they will give 30 other people without understanding what are your specific requirements. So you can listen to all the experts but the only person you need to trust for Stock Market advice is....you. And here's the best part... learning it is not rocket science and today I am going to tell you where you need to start. So Ladies and Gentlemen, welcome to this article Stock Market for Beginners

 In today's article we are going to discuss, How to make the best Stock Market decisions? Step-by-Step procedure on how to buy your first share using KITE. But most importantly, towards the end, I'll give you a Bonus Tip so that you don't make the same mistakes that beginners make in the Stock Market. 
 Let's begin. In order to make the best Stock Market decisions, you need to do two things. 
#1: Stay Updated : The best Stock Market decisions are made by people who are aware of what is happening around them. Because local, national and international news have a huge impact on the Stock Market like changes in oil and gas prices, Rupee vs Dollar rate, Union budget, elections, even any rain related prediction because most of India's agricultural production depends on the monsoons.

 So staying updated with what's happening around you will help you decide what is the right time to buy or sell stocks. Let me give you an example. After our Director General of Military Operations announced that surgical strikes happened, it rekindled war tensions between 2 nations. Whenever there is negative news like this, it causes a knee-jerk reaction among people who sell their shares causing the share prices to go down. When surgical strikes were announced, Nifty dropped as much as 2.1 percent. So everybody who thinks that war is the answer to everything, ...think again. Because not only does it gravely affect our Jawans who are standing on the border but it also affects our Indian Economy as a whole. Nifty recovered later but staying updated with the news and reaction to that news is crucial especially when you are involved in intra-day trading. Now, how to stay updated? You can read financial newspapers like Economic Times, magazines like Forbes India. The more you read, the better sources you will find. 

#2 :To make the best Stock Market decisions, you need to Research about the companies. See, whenever you go for grocery shopping before deciding which packet to buy, you check various parameters like Energy, Carbs, Protein.
Similarly, whenever you go for company shopping you need to check a few things like their Annual Report, Financial Data, Past performance, how innovative that company is, customer satisfaction, what news are they making..

  Are they launching a new product? Doing some merger? Changing their management? Or are they in news for some scandals? These and many other parameters will help you decide whether a company is doing well or will it do well in the future? I know it is sounding complicated but trust me, the more you analyse companies, the easier it will get. Let me give you an example. 

In the Stock Market, you can even invest your money in a particular sector like the Pharma Sector, Automotive Sector, Banking Sector etc.. So in the recent months, the Automotive Sector, which includes companies like TVS Motors, Mahindra and Mahindra, Ashok Leyland etc.. have noticed a huge drop in their sales. So they were hoping that when our FM Nirmala Sitharaman will announce the Union Budget 2019, there will be some good news for the auto industry. But in the Union Budget, there was nothing for them. Infact, diesel and petrol prices have increased. 

Now there are 2 investors. A and B. A thinks that the prices of Auto company shares will go further down, so he decides to sell all of his Auto company shares. But B notices that our FM has given good news for Electrical Vehicles (EV) in the form of GST cut, tax reduction for EV car loans. So, B does further research to find out which of the auto companies are making a shift to EV in future. Let's assume it's Maruti. 

So, B checks other parameters of Maruti and her intuition says that even though Maruti sales prices have dropped for the past few months, when they will release the electrical Wagon-R, their share prices will go back up again. So, B decides to buy the shares of Maruti. Isn't it interesting? This is just a simple example of how you combine news with company research and your intuition to make a decision. Now, only time will tell whose decision is best. A or B's. If B has made the right decision then she is going to make a lot of money in the future. Making the right decision in the Stock Market comes from knowledge and experience.
 And to gain experience, you need to invest small amounts to stay in the Stock Market long term so that you can learn from your success and your failures. 

Finally, we have arrived at the section. For you to understand how to use Zerodha's trading terminal, today as an example, I am going to buy 1 share of ITC. You can do this both on your desktop as well as on your mobile phone using the KITE app.  As soon as you login, the screen that will be displayed. On the left hand side, you will find the Market Watch. 

This is where you can add the companies that you are interested in following so that you can Buy, Sell or Query Information about them right from here. Now because we want to buy ITC, let's first add ITC to our Market Watch by searching for 'ITC' and clicking on the '+' sign. This is the last traded price which tells us how much the stock is trading at, at the very moment.

 If you click on the 'Market Depth' button, you will see these numbers. The 'Open', 'High', 'Low', 'Close' ranges give you an idea of at what price point the stock opened, the highest point it was at throughout the day etc.. If you want more clarification about these numbers I'll tell you what to do in a minute. Now, our goal is to buy 1 share of ITC but before we do that, let's add some funds to our account.

 You can go to the 'Funds' tab and transfer some Rs. 1000 to your account here. You can transfer how much ever amount you want depending on the shares you want to buy. After the transfer is complete, let's go back to the dashboard. Since we want to buy 1 share of ITC, lets click on the Buy 'B' button next to ITC. And this order form will appear on the screen. 

Here, you will see 'Order Type' which has 4 options. Market, Limit, StopLoss and StopLoss-Market. Let's understand what these options are. You can place a 'Limit' order when you are particular about the price you want to buy the stock at. As you can see, the last traded price of ITC is 249.70 But say, I want to buy this share only when it falls to 248. In such a situation, you can opt for 'Limit' order. But the problem is, if the price doesn't fall to 248 or below then you will not get the shares. 

But suppose you want to buy the share at whatever market price it's available at right now, then select 'Market'. Right now, the market price is 249.55. But the issue with this is if you are placing the order and at the same time the market price also goes up to say, Rs. 252 then you will get ITC at Rs. 252/- This means, when you place a market order you can never be sure of at what price you will undergo a transaction. CNC, Cash and Carry is for Delivery Trade i.e if you want to hold the shares for a few days, weeks or years. And MIS is if you want to trade intra-day i.e if you want to buy and sell on the same day. So I want to buy one share of ITC, at Market price and I want to hold it, so I am selecting 'CNC'. Now I hit 'Buy'. As soon as you hit buy, your order gets transmitted to the exchange. You can go to the 'Orders' tab and check your details in the Order book. 

If your order has been executed, the status will say 'Complete' and now you can see an entry in the 'Trade Book' which is right below the order book. So now I officially own 1 share of ITC and this will remain in my DEMAT account until you decide to sell it. And that's all it takes.

Finally, it is time for the Bonus Tip. Investment guru, Warren Buffett has said and nobody else has put it better. Stock Market is not one big, right or wrong decision. It is a combination of small decisions (right or wrong) that will teach you how to identify good companies.

As you saw, both A and B made different decisions to Buy and Sell. So who do you think will make the most money? I'll tell you. The one who will keep learning by investing small amounts. So today's Bonus Tip is this Start small. Please don't invest huge amounts on your first day. 

Take advices from everybody, experts, stock brokers. But only you can make the best Stock Market decision by learning, working hard and gaining experience which is the only way to generate long-term wealth. Are you interested in learning more about how to make money? If yes, then type 'YES' in the comments below or type 'No' so that I know whether I should make more finance-related article or not. 

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