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You can invest or trade at the comfort of your home or when you are on a holiday, what is required is just a laptop or mobile with an internet connection.
Basic requirement to start trading or investing is having a bank account ( with internet banking is preferable) , a demat account and a trading account.
A stock market is a place where the buyer and sellers come to buy or sell shares. These shares are available to transact on an entity called stock exchange. Companies who wish to raise fund to expand their businesses get listed on the stock exchange and people ( retail, high net-worth, or foreign investors) interested in those businesses buy the shares of that company at a certain price ( which is provided by the exchange)In India, currently, there are two large stock exchanges namely NSE ( National Stock Exchange) and BSE (Bombay stock exchange). BSE is the oldest stock exchange in Asia.
There are 2 depositories where DEMAT account is opened, they are NSDL and CDSLDemat account is used to hold shares in digital form. You can think of it like you use a savings account to put in your money, and you can see via net banking how much money you have, similarly, you can see all your holdings of shares in your Demat account. With the same analogy, you can think of NSDL and CDSL as your bank holding your shares digitally.
A stockbroker is an intermediary between the stock exchange and the Investor. Anyone who is transacting is an Investor or a trader. One can not buy/sell shares directly from the exchange. You will have to go through a Sebi-registered stockbroker to buy or sell shares. ( SEBI is the Securities and exchange board of India, which works as a watchdog for all stocks and commodity-related transactions)To buy or sell shares, you should have a pan card, address proof, a bank account ( preferably with internet banking ), a Demat account, and a trading account. You will have to open your Demat and trading account with a SEBI registered stockbroker. Demat account will be opened either in CDSL or in NSDL ( your broker will help you to open these accounts)
If you want to open a Free Demat/ Trading account, click the link below.
If you want to see a comparison of these three brokers in terms of account opening charges, brokerages, and trading platforms, you can click here. once your Demat and trading account is opened you can go to your stock broker website, put in your details, and start buying or selling the share which is listed on the exchange. Companies that are coming for the first time in the stock market come through IPO ( Initial Public Offering). With many brokers, you can also invest online for these IPOs.
If you buy a stock with a view of selling it on the same day or in the next few days (a couple of months), then this is called trading. But if you buy a stock with a longer-term view like 1 year or more and hold on to it then it is called investing. In the stock market, you can do trading and invest simultaneously, i.e. you can buy and sell some shares for quick gains ( trading), and the rest you can invest for long-term growth( investing)If you buy and sell the shares during the same day it is called intraday trading. Generally, stockbrokers give you leverage if you do intraday trading. So for example, if you have 5000 rupees in your trading account and your broker gives you 10X leverage then you can buy or sell shares worth 50K intraday. If you don’t exit your position before the market closes then your stock broker square off the position you have. If you have taken a position without leverage then the stockbroker will not sell the shares you have bought.
Fundamental analysis is mainly related to the company’s financial health and overall economic health. Generally, investors use fundamental analysis to buy or sell shares. It includes, but is not limited to studying companies’ balance sheets, Profit and loss statements, cash flow statements, industry analyses, competitor analyses, and overall economic health. If we talk about the price-to-earnings ratio or price book value or net profit margin of the company we are mainly talking about fundamental analysis. Studying the past price to predict the future price is known as technical analysis. Technical analysis is nothing but a price action analysis. Generally, traders use technical analysis to buy or sell shares. Over the years there are many theories that have evolved in technical analysis like Gann theory, Elliott wave theory, Indicators based analysis, and different types of charts like candlestick charts, bar charts, line charts, etc. All of these are part of the technical analysis.
In a nutshell stock trading is buying and selling of shares. And we can do this through our stockbroker. To open an account with a stockbroker you should have a savings ( or current) account, PAN card, and address proof.Then with the help of a stockbroker, you can open Demat and trading account. Once they are opened all three will be linked ( Your savings account, your Demat account, and your trading account).Once this is done you are ready to buy and sell shares, all you need is to transfer some money from your bank account to your trading account.You can buy/ sell during market hours. Also if you want to apply for an IPO you can place your order for it also.
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