Want to do stock trading but don’t know where to start? You can embark on learning to trade and start with these basic steps.
If you want to start trading stocks, first you should have to make yourself familiar with, what is stock trading and how it works? Because little or half-knowledge about anything is more dangerous than no knowledge. If you want to get the basic insight into it then please check our article about what is stock trading?
2. Open a Brokerage account
a) Brokerage account / Trading account:-It is the platform which is used to buy and sell shares/stocks. Firstly you have to credit funds/money into a brokerage account and then you can make transactions by buying and selling shares. Simply we can say it is an account that enables you to do stock transactions.
b) DEMAT account:-it is an online storage account where the digital/electronic copies of your stocks are held. If you buy 100 shares of Tata Motors, it will be stored electronically in a dematerialized (or Demat) account instead of the investor possessing physical certificates. A Demat account converts the physical shares into digital/electronic form, therefore dematerializing it.
After you have bought the shares, a digital contract note (electronically generated) will be sent to your email by the broker after market hours on the same day. This note will contain all the transactional information such as the name of stock, quantity, purchase price, total amount, brokerage, taxes, stamp duty, etc.
Let us understand the difference b/w brokerage and Demat account with an example.
You have Rs 500 rs in your wallet. You go to a shop, purchase several items and put them into your shopping bag, and pay the amount to the shopkeeper from your wallet.
In a similar context of trading, your wallet is the brokerage account (store money, enables you to buy and sell shares) and your shopping bag is the Demat account(used to store shares) and the shop is the share market.
To sum up, if you want to do stock trading then you need three things: a trading account, a Demat account and a bank account. Nowadays broking firms offer investors a 3-in-1 account i.e you don’t need to open these accounts separately because many brokerages offer these all services in a single account.
3) Learn and master three pillars of stock trading
Stock trading is not just limited to opening a Demat account or brokerage account. For earning constant profit and succeed in stock trading, you need to master three pillars of it
- Trading psychology
- Trading system
- Money management
We have started a series of articles about three pillars of stock trading on our website tradeoverbrain.com Subscribe to our blog if you want to gain good command over these pillars of stock trading.
4. Practice virtual trading before putting your hard-earned money
Virtual trading (referred to as paper trading) or simulated trading, in which traders can practice trading (one can buy and sell shares in actual market conditions) with virtual/imaginary money, without the involvement of real money. Nowadays, there are a lot of free-of-cost virtual trading platforms available in the market and known as stock simulators. Virtual trading can also be used to test new risk-free approaches.
As stock trading involves market risk, there is a strong possibility that beginners can lose some money. Therefore, for beginners, Virtual trading is the best source to learn stock trading without risking their real hard-earned money.
Always remember the famous quote of Warren Buffett:-
Rule No. 1:- Never lose money.
Rule No.2:-Never forget rule No. 1
So this was a basic insight into how to do stock trading. If you still have any doubts or questions, please comment to us below and give your valuable suggestions.