The majority of our country’s population hesitates to trade in the share market and this has much to do with the fears and doubts associated with it. The concept of- why a business owner would want others to get shares of a company he/she has built and why a common man should consider investing in such companies- seems to be unclear for most people. Here is a simple way to understand share and equity trading in India:
Companies are funded at the initial stage by venture capitalists, however, once these funds are exhausted and the company reaches a certain level of growth, it can aim to grow bigger with add-on funds. For this, the company reaches out to the public to raise money. The people on the outside can choose to invest in the company with an amount as low as Rs. 10. Irrespective of the amount, the people are now joint owners of the company. As and when the company makes a profit, the owners will receive their proportionate share. When the public invests in a company, they receive certificates called equity shares. Only when a company gets publicly-listed i.e it is open for investments in the marketplace, and people start investing, can one issue equity shares.
In this manner, the company receives investments that it requires for growth and the people make profits through a big company just by investing in them wisely.
Now how does one invest ‘wisely’? Online equity trading or just trading in general is a tricky affair. You don’t need to be a businessman to understand how it works but yet a thorough knowledge about the share market is a must. Here is where our tips on equity trading in India will help you get through:
Plan your strategy
When it comes to trading on equity, one cannot jump on a bandwagon. Trading is meant to earn quick profits but based on the understanding of price movements. While defining your trading strategy, make sure you do a good analysis of how much amount you have for trading purposes and how much you can afford to lose. Do not follow a trend based on popular opinions as it’s your money at stake so it should be your strategy to be used.
Make sure your broker is on the same page as you
Letting your broker know your goal and communicating with them transparently is necessary. For equity trading, you need to be unambiguous and clear to avoid possibly foreseen losses and risks.
Stay updated regularly
Most people rely on their agents for managing their equity shares. A good broker or agent would keep you updated with the ongoing trends but if not, you must stay updated with the share market at all times. Negligence towards your shares and the surrounding market can often lead to setbacks.
It’s not all about the money
Being worked up over your losses or too focused on profits won’t help in this game. Equity trading is strongly based on having the right strategies and being able to mitigate risks. Profits will follow subsequently.
Less is more, here too
Trading all over the place is never advisable in the share market. Invest in a few but good companies and let your money grow steadily. Also, you need to keep a check on their charts and stay updated on every stock to understand their price movements. Having too many companies to manage can make this process messy.
Invest your time along with your money
The day you make a decision to invest in stocks, you also sign up to invest your time for this. You don’t have to run the company but you do want to make your money run. So research rigorously and make smart choices. Decisions made in a rush can cost you money.
These were our basic tips to get started on your equity trading journey. However, if the tips already seem overwhelming, we are here to assist you. Our agents work closely with the clients and make informed decisions at every stage. For all your share market and equity, needs do get in touch with us today.
Also Read: What is Equity Trading? Meaning, Benefits and Types