Today I will be explaining in detail how to invest in share market. I am writing this piece of content for beginners who want to start investing in share market but don’t know where to begin.
If you are one who also wants to start investing or trading but don’t know how to get started then this post is for you. Read the following content very carefully and I assure you, you would not need to read anything else to get started.
If you’re considering trading as career then you should start learning from today. To learn how to invest in share market, you need to get into it by opening your trading and demat account.
Then you will be ready to invest in share market. Once your trading and demat accounts are opened, you can pursue career in it or can start investing in good shares to accumulate wealth.
For your knowledge, only 2-5 percent Indian citizens actively invest in share market. By knowing this small number or I would say tiny number, you can know what growth potential and career opportunities it has to offer to you.
To invest in share market, you don’t need large sum of money, you can start with as low as ₹500 to just learn how the market works.
Once you learn the basics, you will be ready to earn from it.
How to start trading in India?
To start trading or investing in India, you will be required to have following things:
- Trading account
- Demat account
- Initial capital: There is no threshold, you can start with as low as ₹500 (just for learning purpose).
- Basic understanding of share market which includes how to buy and sell shares, place stop loss orders, and little bit technical analysis.
You might be questioning, that is all you need to start? Then Yes, this is all you need to start learning trading.
Next, I will be taking you through all the mentioned things one-by-one. After reading this content, you will be ready to enter into the share market. So let’s get started.
How to invest in share market
If you want to learn how to invest in share market then watch this 40 minute video in which I have explained from the very beginning. I request you to watch the entire video very carefully without skipping a second.
By watching the video, you will not only learn how to get into the market but also very important points to actually make real money. Thousands of viewers have watched this video and learned how to invest in stock market.
Those of you who would like to read can continue reading.
How and where to open trading and demat account in India?
To start investing in share market, you will be required to open a trading and demat account. These are mandatory things for share market trading. In my recent post, I showed a list of top stock brokers in India with whom you can open your trading and demat account. I am listing the same here:
- Angel Broking – Offer free demat account for first year, zero brokerage for first 30 days, flat ₹20 brokerage per order, advanced trading platform, free equity delivery, free learning platform.
- Zerodha – Advanced charting and trading platform, flat ₹20 brokerage per order, free equity delivery order, free limited access to paid services and learning platform.
- Upstox – Flat ₹20 brokerage per executed order, advanced trading platform, free equity delivery, free access to paid courses.
You can click on any of the above mentioned stock brokers to open your trading and demat account. Account opening process only takes 15 minutes. Yes, in only 15 minutes you can open your demat account in India.
The trading platforms, I am recommending are one of the top 5 stock brokers in India. Their account maintenance and brokerage charges are very low and within the pocket of retail investors. Their trading platforms are very advanced and easy to use.
I have written dedicated posts on how to open demat account in above mentioned stock brokers. Here are the links of those posts, if you would like to know step-by-step demat account opening process:
- How to open Angel Broking account
- How to open demat account in Zerodha
- How to open Upstox trading account
To open your trading account, you will be required to provide your Aadhaar card, bank account and PAN card details. Today it is very easy to open your demat account and as mentioned earlier it only takes 15 minutes.
I am not explaining the demat account opening procedure here in this post because I have already written dedicated posts for it.
If you are confused between stock brokers then I request you give importance to following lines:
- Angel Broking: You should open your account with Angel Broking if you will be trading from mobile. So far I have not seen any other stock broker’s app as advanced as Angel Broking. Therefore, I recommend you open your account with them if you will be trading from mobile.
- Zerodha and Upstox: You can open your demat account with Zerodha or Upstox, if you will be trading using a computer or laptop.
Initial capital required to start trading
Once your trading account is opened and you received your client ID and password, next step is load money to it to actually execute real trades.
For your knowledge, you don’t need Lakhs to start trading, as mentioned before, you can start with as low as ₹500. But, it is obvious with ₹500 we can’t earn anything just we can learn how to place buy, sell and stop loss orders.
So, how much capital should we add to our trading account?
See it depends upon only and only your financial background, but what I personally suggest you is start with ₹5000-₹10000. I firmly suggest you do not load more than that to your trading account.
Learn with this amount, execute small trades and learn from your mistakes. If a trade goes wrong then learn what was the mistake, why the trade turned against you?
When you start making real profit and you are able to earn 10 percent or more returns, then it means you are learning and ready to take next step.
Generally, as of the statistics, more than 90 percent new traders loss their entire capital within the first 3 months of trading and then stop trading.
I don’t want you to become one of those traders. I want you to come in the 10 percent traders who actually make profit and earn from trading.
To earn from trading, you will need to be strictly follow the rules I am going to share with you for free. I made mistakes and lost decent amount and then learned these rules. Believe me you need to follow them in the beginning else you will be like me whose trading account exhausted thrice before he learned the rules to survive in the share market.
- Never ever start with large sum of money. Start with ₹5000-₹10000.
- After winning 2-3 trades, don’t be over confident. Just stay calm and follow your trading system.
- Avoid impulse as well as revenge trading at all costs.
- Never do more than 2-3 trades in a day.
- Avoid margin trading.
- Never ever do trading with stop loss. In fact, stop loss is your friend in share market. Remember, you cannot decide how much you will earn from the market, you will need to take whatever it gives you, but you can certainly decide how much you are willing to loss in the market.
- Always execute trades in which you are getting more 1:1 risk to reward. Less than that ratio is not recommended at all. Ideally your target should be 1:3 which means for risking ₹100 rupees you should be earning ₹300.
- Buy or sell at major levels. Try to get multiple confluences before you enter in a trade.
- Never ever follow others’ trading tips. Most of the new traders rely on others’ trading tips. This is a huge mistake. And as a well-wisher, I advise you stay away from this. Make mistakes and learn. This is how you will survive in the long run.
These are the rules I would like you to follow. Look initially you strictly need to follow them. After some experience, you can make your own rules but as of now apply these rules to your trading.
I will shortly publish a comprehensive intraday rules book for beginners’ which will help you earn money so stay connected.
How to place buy, sell, and stop loss orders?
Watch this video to know how to place buy, sell and stop loss orders in share market. I have used Angel Broking to explain the process. But process is same for other trading platforms.
If you would like to learn how to do intraday trading then this is a must watch video.
You can earn in share market by taking short or long position; in other words by buying or selling a stock.
Long position reflects your market view is bullish. After your analysis, if you find that market will go up from its current position then you buy a stock or index like Nifty, Bank Nifty, or Sensex. Let’s understand it with the help of an example; as of this writing, Nifty is at 13500 and you think it will continue to go up. In this scenario, you will buy Nifty or a stock of your choice.
Short Position means your view regarding the market is bearish and you think market will go down from its current position. For example, let’s assume Nifty is at 13500 (as of 12-12-2020) and after the analysis you reckoned that within the next few days or same day, it will fall to 13000. Then in this scanerio, you take short position by selling Nifty. By the way, short position means you are on sell side.
Stop Loss is very important in trading. In fact, it is often said, stop loss is your friend in trading. You cannot decide how much stock market should give you, but you can certainly decide how much you are willing to lose. With the help of following example, I am trying to show you the importance of stop loss in share market:
As of now, State Bank of India share price is ₹272.45 and let us assume, my view is that it will further go up and within the next few days, SBIN share price will hit ₹300. With this view point, I bought 100 shares of SBIN without a stop loss. But all of sudden, market starts crashing and instead of touching ₹300, SBIN share drops by ₹50 to ₹222.45. Now instead of earning ₹2755 (I thought price will go up by ₹27.55 rupees, 27.55×100 shares) I lost ₹5000 (price drop 50 × 100 shares).
Similarly, in the same trade, if I would have decided to exit from the trade with a ₹10 stop loss which means if SBIN price would have touched ₹262.45 I would have exited then I would have lost only ₹1000. I executed this trade with almost ideal 1:3 risk to reward ratio.
So, with the help of above example, we have learned how we can limit our losses in share market with the help of stop loss order. Therefore, before entering into a trade, decide a clear target and stop loss and strictly exit at that price.
I assume, now you are ready to invest in share market. This was a complete beginner guide to help people like you to know how they can enter into stock market and start investing or trading.