Share market interests me a lot. Why? It is like a life some days you’re on clock nine and some days you’re in a stable state and some days you’re down. You can watch capital appreciate, get higher returns, secure your funds from the inflation and earn from dividends. Isn’t interesting? Yes, Trading is as fascinating as watching movie “Million Dollar Traders”.
Previously, it was a long procedure to buy shares. Now, it becomes a very easy task. You just need an Internet Connection, Saving Bank Account, Amount in your Saving Bank Account, Demat Account, and the system to log in, that’s it.
Are you excited? Want to buy the share for the very first time?
Okay, I will tell you the way to success how to buy or sell the shares online.
Stock Market Terminology For Beginner
When you have the share of a certain company, it indicates you hold the portion of share with the company. You’re part of companies’ profit or loss.
To come down the risk of loss in share market you can fix the future value of the share today and purchase or sell only when the condition is fulfilled. This instrument is kind of an agreement.
3. Share Market:
Allows trading of shares
4. Primary Market:
registering in the stock market comes under primary market.
5. Secondary Market:
after registering in the stock market company allows trading of the shares.
6. Demat Or Trading Account:
you need to open Demat or trading account For trading in the share market. Demat or trading account is linked to saving account for easy transaction of money.
7. Earnings Per Share:
it the measurement tool for company’s profitability. It shows the company’s present situation. EPS can be calculated by dividing the net income of the company by total shares outstanding.
you can consider beta for measuring the risk factor. Standard beta is 1.0. Above the 1.0 it shows more risk but high return and below the 1.0 it shows low risk but lower return.
9. Market Capitalization:
the overall value of the company ‘shares are defined as market capitalization.
10. Moving Average:
this term measures the trend of the share. Take the price of the share for a particular period and then divide it by the total number of days.
by margin account, you can trade more shares than you can. It is a loan from the brokerage.
12. The Ask Price:
the minimum price at which the seller wants to trade his shares.
13. The Bid Price:
the maximum price at which the seller wants to trade his shares.
14. A Market Order:
buying or selling the shares at the current available price is a market order.
15. A Limit Order:
deciding to buy or sell the shares at the particular or the minimum or maximum value is a limit order.
16. A Stop Order:
a stop order triggers when the decided price is reached and it becomes a market order after reaching the particular set price. You can place a stop order for buy or sell.
17. Day Trading:
buying and selling within the same day are day trading. Day traders do it for earning over small price variation in highly valued stock.
dividend is the portion of company’s profit give to its shareholder.
19. Stock Exchange Market:
allows trading of bonds, mutual funds, derivatives and shares
an indication of completion when you place an order to buy or sell the shares.
company sells the shares very first time and becomes public is called an initial public offering.
How To Buy Or Sell Shares For Beginners
1. Open Demat Account And Trading Account With Broker Or Firm:
To open an account you have to go through KYC with the security market. The valid proofs of identity, proof of date of birth, bank proof, valid address proof or office address in case corporate account.
2. Open Saving Account In A Bank With Online Transfer Facility:
You can open saving bank account with the bank and link your Demat account and trading account with saving bank account. The other way is to open the saving account and demand or trading account with the same bank who offers the facility of trading.
3. Link Your Demat Account With Saving Account:
After linking your saving bank account with Demat and trading account you will get login id, membership password and trading password. Now, you have all required information to buy or sell the account.
4. Buy Shares Online:
- Do research about the company’s share you’re going to buy. First, download the investor presentation document of the company. In this document you will get information about company’s review or annual reports, profit margin, return on equity and expected growth.
- You can search for the companies’ reviews on online websites who offer relevant information about the company. The sources provide information regarding company’s economic situations and financial results. The best websites are:
- Evaluate the value of investment by price to earnings ratio and earnings per share
- After all research now you are to buy the shares. Some companies offer direct share purchasing without through any broker. You can call or message the company and ask they provide direct share purchasing or not. If they allow direct purchasing tell them to send relevant information to your e-mail id. They will send you plan’s prospectus, application form, and fee for the investment plan. Or you can choose the broker he will do all this work for you and will buy on your behalf.
- Deposit money in your Demat account to purchase shares.
The Process Of Buying Shares Online.
- Open the official website of your firm or broker.
- Click on trade now or any option related to this
- Enter login id, password, trading password and login.
- Place an order for the shares you want to purchase it can be the market order, the limit order and the future order.
- The stock Exchange processes your order this processing is called settlement cycle. In settlement cycle, the clearing house takes care of transfer and ownership of the shares smoothly. The process takes t+2 days to process and ended with the net outstanding position at the end of the settlement process.
- The shares will be credited after t+2 days and now you are an owner of these shares.
5. How To Sell Shares
The selling process is same as buying the shares. Transfer your share from Demat account to trading account and place a selling order. It also takes T+2 days for settlement and to reflect amount in your account. Shares will be debited from your Demat account And amount will be credited to your Demat account.
5 Important Tips By Warren Buffet
- Invest in yourself
- Get out of cash and get into assets
- Invest in income producing assets
- Do research on a company before investing
- Invest into things you understand
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