When Should A Beginner Buy Stocks
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If you are new to the stock market and want to know when you should buy a stock, then it is very important for you to have general knowledge of the stock market. Do not think of the stock market as such that you will make money by buying any stock whenever you want. People who buy in the stock market without getting any information mostly have to face losses. So let us tell you some steps which will help you in taking the decision.
Knowledge of Fundamental Analysis required
To invest in a stock, it is important to have knowledge of fundamental analysis. Because only with the knowledge of fundamental analysis you can prepare the accounts of any company. All the information about what business the company does, what profit it makes and the balance sheet of the company is obtained from fundamental analysis.
We have written a detailed article on fundamental analysis, you can go and read it. Before buying any stock, it is important to know in which sector the company whose shares you want to buy operates and for how long has it been in the market.
If that company has given good returns (ROE) to its investors for many years and you see good growth of the company in the coming time, only then you should think about investing. You should also see the quarterly results and annual results of the company so that you can know whether the company is making profit or loss.
Knowledge of Technical Analysis required
Once you know about the company through fundamental analysis, now your second task is to get some information about technical analysis also. Fundamental analysis will help you know which stock you should buy and why. But through technical analysis you will know at what price and when you should buy the stock.
It does not take much time for those who have been working in the stock market for a long time. Due to their experience, they immediately know whether they have to invest or not. The more information you acquire about technical analysis, the more capable you will be in taking decisions. In technical analysis, you will have to learn support and resistance very well. Because only with this information you will be able to decide at what price you want to buy a stock.
If you buy the stock at the right time, you will get profits quickly. But if you invest in stocks without the knowledge of technical analysis, then you may not be investing in the right place and you may face losses. Although good stocks will go up in the long run, a stock taken at the right time gives more profits. Learn as much as you can about price action, candlesticks patterns, chart patterns.
Long term investment is beneficial
If you do not have much knowledge of the stock market and want to invest in a stock, then you will have to see which are consumer based companies. That means you will have to get information about some of the top companies whose products are sold in everyday life. For example, Hindustan Unilever is a company whose many products are sold daily.
In simple language, investing in companies selling daily needs products is very beneficial. If you want to invest in good companies for the long term, then it is not necessary for you to have much knowledge. Because for long term investment you just need to have faith in the company. If a company is your favorite and you like it, then you can invest in it for a long time.
Newcomers should invest a little money in the beginning. One should not invest too much money at all. When you start getting some knowledge about the stock market and how things work, only then you can think of investing as per your capacity.
Invest in Index
People who are beginners in stock market should invest in indices like Nifty 50. It is considered the safest investment because it has less risk. Because investing in a stock requires experience, but investing in an index does not require much research. In India, both Nifty 50 and Sensex are indices in which new people can invest.
In a way, these are the economy of India and if the economy grows, they will also continue to grow in the long run. A stock may be zero but the index is unlikely to be zero. There are many companies inside the index like Nifty has a total of 50 companies and Sensex has 30 companies. Which company to bring in and which to exclude, all this work is done by the exchange.
