Most basic things you should know before entering the Stock Market.
After watching Scam 1992: The Harshad Mehta Story there is a sudden urge in all of us to explore the Indian stock market, to get our hands dirty in stocks and shares, but life is not a movie and you are not the next Harshad Mehta (wink). If you want to take a deep dive into the Indian Stock Market and don’t know where to start, this is the right blog for you, keep reading.😄
- Demat Account: Demat Account is just like your bank account but instead of depositing and withdrawing money here you buy and sell shares. You need to get a Demat Account from a registered broker such as Zerodha, Upstox, or OnePaisa Capital. Some of them are free while some charge an account opening fee, and each of them provides various features on their platform. Opening a Demat Account is quite simple, all you need is Mobile Linked Aadhar Card, PAN card, and you must be older than 18 years.
- NSE/BSE: NSE stands for National Stock Exchange and BSE stands for Bombay Stock Exchange. All the public companies that you see and hear about are either listed on BSE or NSE or both. These are like a shop where you can trade(buy/sell) shares of a public company. Although NSE is quite new as compared to BSE still it’s everyone’s favorite, the huge volume of trading makes it easy for price discovery on NSE. (You don’t have to know much about NSE and BSE, just know that they exist 😅)
- Market Time: Every exchange in the world has a fixed time for trading. In India, the trading starts at 9:15 AM (remember Harshad Mehta’s bell?)and closes at 3:30 PM. That doesn’t mean you can’t place an order out of this time bracket, you can place an order (through your broker’s website/app) at any time but it’ll only be executed when the market will open. The time between 9:15 AM and 3:30 PM is known as a trading session when millions of shares are bought and sold. Interesting fact: In India, only once trading is done from 6:15 PM to 7:15 PM that is on Diwali and this session is known as Muhurat Trading.
4. Placing an order and SL: Buying a share is very easy once you have a Demat account, just deposit money through UPI, Card, Bank Transfer and place a buy order, it’s as simple as buying something on Amazon. But with more power comes more responsibility, buying a share is very easy but you must know when to exit the position. (Taking a position in the stock market means either buying or selling a share, if you’re buying and thinking of selling in the future you’re taking a long position, and if you’re selling first with an aim of buying later at a low price then you’re taking a short position.) SL stands for Stop-Loss and a stop loss saves you from unwanted risk. Remember Risk hai toh ishq hai but take risk according to your appetite.
5.Charges and Brokerage Fee: Although all the brokers advertise themselves as “Zero Charge Brokerage” but that doesn’t mean buying and selling shares are free of cost. There are many hidden charges such as DP Charges, GST, etc. that you should be aware of before taking any trade. I recommend using a brokerage calculator to calculate how much you’ll be paying beforehand. We all like surprises but not these ones 😁.
6. Stay away from Telegram channels: This is my most important advice to everyone new who’s reading this, there are thousands of channels on Telegram and other social media who might lure you with screenshots showing lakhs of profit, but you should never join and take tips from them. In the long run, if you’re taking advice from some stranger you’ll end up blowing your bank account (then you’ll call stock trading gambling 😢). Always do your own research (fundamental and technical both) before buying any share.
So these were the most basic things you should know before entering the stock market. Stock Trading is a very vast topic and can’t be covered in one blog. I’ll be writing soon explaining other jargon of the trading, keep buying keep selling. 😄