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Getting Started in Share Market Trading. Things you should know
It is
very interesting to invest in shares, though most of the people would like to
start with small money.
First of
all, you need to know a little bit in detail about the stock market, then about
the shares and the mode of their trading. What are the risks involved and how to
be smart in dealing with shares?
Stock Market – It is the place where the shares of listed
companies are bought and sold. In India, you have BSE and NSE as two big stock
exchanges.
Shares are
bought and sold by you and me only through approved brokers.
Approved brokers are
mostly banks like the ICICI, HDFC, IDBI, UTI Bank, SHCI, are to name a few.
First you
need to open an account with a bank, that has the Demat
account facility.
Go to the
respective bank and open a Savings account with deposit of around Rs. 10,000.
Tell the
bank that you want to deal in shares and ask them to open a Demat account. It
will be done automatically after signing a few forms.
A Demat
account is nothing, but the account where the shares bought by you will be kept
separately.
Only you
could operate that account online, through Internet.
You
could open the online facility offered by the ICICI, HDFC or ShareKhan or
others and buy shares you wish and decide the quantity and the price.
Here the bank
will act as a broker. You online order for purchase would be
carried out by the bank. They charge broker commission, much less compared to
private brokers.
It is
very important for you to have enough balance to your credit in your savings
account.
As and
when you buy on line, your Demat
account will
be credited with those shares. The money for the purchase will be automatically
deducted from your account by the bank.
You also
have to keep looking for opportunities to sell the shares that you have already
bought and kept in your Demat account.
For
buying and selling, it is necessary to familiarize which shares to be bought at
what prices and sell them at what price.
As and
when you decide to sell (depending on the price quoted in the market) you could
sell them through online trading system.
The
moment you sell your Demat account will be debited with the number of shares
sold by you.
Your
account will be credited with the amount for which you have sold.
Depending
on the amount of profit earned, tax will also be deducted by the bank (TDS).
The bank will give you a TDS certificate by the year end, i.e., March 31, of
that year which you could attach with the return to justify the tax payment.
When the shares could be bought or sold?
Always sell the
shares when the price is up and buy when the price is down. Every body had to
adapt to this formula.
What profit should it give you?
You buy a share for
a particular price. Take the amount as investment. Any bank will lend you at ten
per cent interest. It will give you 24 per cent return if the share price rises
in such a way. Do not wait for the market to crash and start searching for
buyers for the price you quote.
After
selling, never look back and repent for what profit you have earned, had you
delayed the sale. Be happy that it did not happen otherwise. This is the best
way, to sell.
If you
want to buy, look for 52 week low, look for the peer companies, their price and
compare it with the company you want to buy.
Look for
the prospectus, future plans and the profit the company ought to make in the
next year. Take the perception or a change and buy.
You
cannot take profit in the buys. Losses do occur as long as you are at decent
surplus for which you have no reason to be unhappy |
