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Want To Trade Stocks Online? Here Are Some Handy Tips!

Jun-21-2019Blog by – Mr. Dhruv AjmeraRead Time: 3 Min.Word Count: 679114Want To Trade Stocks Online? Here Are Some Handy Tips!
Stock markets have been one of the most popular means for wealth creation and the allure for equities has been on the rise due to the advent of online stock trading companies. While it is extremely enticing to start trading in the equity markets, for novice investors, it makes sense to learn a few tricks to make sure that they do not fare negatively and endure unnecessary losses. Plenty of stock brokers offer online stock trading facility which lets you buy or sell company shares. Opening an account with such a broker is the starting point of your investment journey. Here are some handy tips for you once you are ready to start trading on your own.

Learn basics of financial analysis: It makes sense to get used to the basics of equity market research to understand the financial condition of a company. After all, the stock prices are driven to a large extent by how the company is performing financially and a novice trader should get some insight into concepts like sales, net profit, dividends, operational profits etc. This will not just give you the a basic understanding of how company’s financials and stock prices tend to relate to each other but also bring in a lot of confidence before initiating a particular investing decision.

Be clear about types of orders: There are various types of orders available when you start online stock trading. Though a full range of orders provided on each trading station differs from broker to broker, the basic orders are market, limit, day and bracket orders. It is essential to various orders as it would be the most primary tool to initiate the trading.

Pay attention to broking charges: Remember that heavy expenses in the form of brokerage charges and other commissions or fees can lessen your profitability in stock trading. Avoid them as far as possible. Ask for the most prudent and economic brokerage plan from your stock broker and ensure that you do not unnecessarily pay additional broking charges especially when your trading activity would be rather limited at the beginning.

Use margin trading judiciously: Margin trading, which lets you trade a far higher quantity of stocks than the amount of funds you have put in your broking account is a double edges sword.  The problem is that you can expose yourself to a heavy liability when you do this. This facility is ideal for investors looking to reap returns from short term action but not having sufficient cash balance. However, the losses could turn out to be huge in case if the trade turns unsuccessful.

Understand the tax treatment: It is advisable that you have to know the tax rules for each of your positions after you engage in active trading/investing. Get advice from a good financial or tax planner to reduce your tax liabilities.  If stocks are sold within 12 months of purchase, it is subject to short term capital gain tax. If the period is more than 1 year then such proceeds are supposed to incur long term capital gains tax.

Be aware of share market tips: In this age of information overhang, there are plenty of stock market tips lurking around on the web or on the television or any other media. New investors have to ensure that they do not fall prey to such stock trading tips as trades initiated based on them could turn out to be pure gamble. Many a times, such tips are provided by inexperienced and amateur advisors without a successful track record. Investors are thus prompted to trade based only on verifiable sources of information and need to do a thorough study of market dynamics before taking a trading call.

Conclusion:

While getting started in stock trading is a fairly easy exercise, discipline and judgment are extremely important to maintain composure. Over long term, these qualities would pay a key role in shaping your journey as a successful trader. Keep in mind not to fall prey to share market tips and increase your trading activity in a slow and measured manner.

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1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
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3. Pay 20% upfront margin of the transaction value to trade in cash market segment.
4. Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 and BSE vide notice no. 20200731-7 dated July 31, 2020 and 20200831-45 dated August 31, 2020 dated August 31, 2020 and other guidelines issued from time to time in this regard
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