How to Invest in Stocks: Quick-Start Guide for Beginners - NerdWallet

What is stock trading? In the secondary market, trading typically means buying and selling shares on the same day. Hence, it is necessary to understand the primary and secondary markets.

1. Primary markets are where companies offer new securities to the public. Here, the transaction takes place between issuers and buyers.

2. Shares issued in the primary market can be bought and sold in the secondary market. Here, the transaction occurs between the buyer and seller, and the stock exchange or broker acts as an intermediary.

Intraday trading is if you buy and sell a share on the same day on trading apps: the trader records a profit or a loss.

Here are tips that will help you begin your journey in stock trading:

1. Open a Demat account

As a trader or investor, you will need a Demat market app or brokerage account to enter the stock market, as you cannot trade in the stock market without a Demat account. Demat accounts work like bank accounts where you hold money to deal with. Securities purchased through the account are maintained electronically.

2. Understand stock quotes

News, fundamentals, technical analysis, and so on influence the stock price – understanding these aspects can help you improve your understanding of stocks and stock markets. In addition, you can use this information to decide when to enter or exit a trade.

3. Bids and asks

A bid price is the highest price you are willing to pay for a stock. The asking price is the opposite; it represents the minimum price the seller is willing to sell the stock. Therefore, it is crucial to decide on the correct bid and ask price to ensure a profitable trade while trading online.

4. Fundamental and technical knowledge of stock

To plan your trades, study the fundamentals and technicals of the stock. For example, a security’s intrinsic value is determined by its fundamental analysis of its inherent characteristics. Moreover, it considers various factors, such as earnings, expenses, assets, and liabilities. Meanwhile, a technical study analyzes a stock’s price and volume history to predict its potential.

5. Learn to stop the loss

Stock markets are entirely characterized by volatility. Therefore, a beginner needs to learn the key to preventing heavy losses on a trading app. First, you must set a stop-loss price for your trade to succeed. And if you fail to do this, you may lose a lot of money.

6. Ask an expert

The share market is unpredictable, and nobody can predict stock prices accurately. But taking advice from an expert helps beginners make the right decision and choices.

7. Start with safer stocks

A significant capital loss, in the beginning, may bring your confidence down. So a wise choice is to start with the less volatile stocks. Of course, that may give you a slow start. However, these stocks have a greater chance of sustaining a good performance even under adverse conditions.

Share market investments can be tricky. You can take the first step to trade success by opening a Demat account. Next, work on developing adequate knowledge of the stock market. It will help you work against the odds and beat stock market volatility.

By Richard