How To Start In The Stock Market
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What is the Stock Market?
The buying and selling of shares of listed companies through an exchange is called the stock market. If a person tells you that he works in the stock market, it means that the person buys and sells company shares through the exchange. The two biggest exchanges in India are the NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) where you can buy or sell shares of listed companies.
If you want to know about the stock market in simple language, then the simple answer is that you invest your money in a business that has been performing well for the last few years. For example, suppose Mukesh Ambani has been running Reliance Company for many years. If you think that Reliance will do better business in the coming time, then you can participate by buying shares of Reliance Company.
When you buy shares of a company, you participate in every loss and profit of that company. If the company does well, you will get profit due to an increase in share prices and if the company does not do well, you may have to suffer a loss due to a fall in share prices. This is just the stock market. Many companies from different sectors are listed on the stock exchange where you can earn money by investing or trading.
The stock market is regulated by SEBI (Securities and Exchange Board of India). It is the job of SEBI to protect the interests of investors. Without the approval of SEBI, not even a leaf can move in the stock market. That means you do not need to worry at all because SEBI is a statutory body of the Government of India.
Now you might be wondering how companies are listed on the stock exchange. For your information, let us tell you that if a company wants to be listed on the stock exchange, then it has to first submit its entire documents to SEBI. SEBI approves based on all these documents and the company can be listed on the stock exchange through IPO (Initial public offering).
Similarly, the process of moving companies in and out is done through SEBI decisions. The companies that commit some scams or irregularities are also removed from the stock exchange by SEBI.
How to start in the stock market?
Now you have learned about the stock market but the biggest question is how to start. So let us tell you very basic things that you should learn first in the stock market. If you are willing to work in the stock market then you will have to learn technical analysis and fundamental analysis. The meaning and function of these two are different.
Technical Analysis – Learn Chart Reading
If you want to learn the stock market, you will have to work hard on technical analysis. You cannot trade in the stock market without learning technical analysis. There are many things to learn in technical analysis. Let us know what you should learn.
Candlestick Patterns – In the stock market, the first start is with basic candlestick. Candlestick charts are the most commonly used. With candlestick, you can understand the behavior of price. Different types of candle patterns are formed on the chart and all have their significance. You have to work hard to learn all the candle patterns.
Support and Resistance – Support and resistance have great importance in technical analysis. Because support and resistance tell you at what price you have to buy or sell a stock.
Price Action – It is useful in detecting the uptrend or downtrend going on in any stock. All stocks or indexes follow price action. By learning price action you will be able to spot trends.
Trendlines – If you learn trendlines in technical analysis, you will be able to do much better in trading. If you learn to use trendlines with price action and support resistance, you can become a good trader.
Chart Patterns – These also have great importance in technical analysis. By learning chart patterns, you can know whether a stock is going to be bullish or bearish. W pattern, M pattern, and head and shoulders are widely used in chart patterns.
You can learn all these things mentioned above in technical analysis. If you become an expert in these then you can become a successful trader in the stock market. You can visit our blog daily to learn technical analysis.
Become an expert in fundamental analysis
If you want to invest in a company just by looking at its financial position and balance sheet, then you can learn fundamental analysis. People who are interested in accounts and like to invest based on company valuation pay more attention to fundamental analysis. You must know basic fundamental analysis because by knowing both technical and fundamental, you can become a successful investor.
EPS (Earning per share) – If you are learning fundamental analysis then you need to know about EPS. Because it tells how much profit you are likely to make per share annually.
Dividend Yield – If a company is earning good profits then how much dividend does it give in its profits? It is also very important for you to know this.
Quarterly Results – It is important to know how much profit or loss the company is making every quarter for the company for which you want to do a fundamental analysis. This will give you information about his growth.
Profit & Loss Statements – In fundamental analysis, it is important to know the profit and loss statement of the company. From this, you will know how much profit the company makes annually and what is its net profit.
Balance Sheet – This contains the complete accounts of the company. How much debt does the company have, where does the company invest the money and how many assets does the company have? By having good knowledge of the balance sheet, you can know about the growth of any company, its future, and its valuation.
For basic fundamental analysis, you need to know all the things given above. Learning fundamental analysis lets you know whether a company is worth investing in or not.
Where to learn Stock Market?
We have told you how to start in the stock market and what is important to learn. Now you have to know where to learn stock market. So let us know what are the right ways to learn the stock market.
Self Study – It is not necessary that only someone else can teach you the stock market. If you can give time to the market, then spend as much time as possible in the live market. If you can give at least 3 hours to the market every day then believe me you will understand things yourself in 6 months and you will be successful in the stock market. All you have to do is paper trade and write down what you learn every day in your diary.
Learn from successful traders – Try to learn from those who have achieved success in the stock market. If someone you know works in the stock market, then you can also learn from them. You can read about many veterans like Rakesh Jhunjhunwala, and Warren Buffet in the stock market and how they started their careers and became successful traders. Some successful traders on YouTube teach the stock market, and you can learn from them too.
The more time you give to the market, the more expert you will become. If you ask me, I have learned by doing losses in the stock market. No one can teach you what the market will teach you. After this article, you must know about both the advantages and disadvantages of the stock market and make better decisions.
