Best Ways to Pick Up Stock Trading in 2021

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Want to learn stock market trading or stock trading as they call it? You will naturally have to pick up some major stock market basics or share market basics before taking the plunge. Stock market trading is for everyone although it is not for the faint-hearted, i.e. you should be disciplined enough to hold on for the long haul without changing course suddenly and blowing hot and cold or getting emotional about your investments. There are several ways by which you can pick up the nuances of stock market for beginners while steadily understanding about picking the best shares to buy for beginners.

You should first define stock trading before you learn to trade in the market. The biggest answer to the question of how to invest in stock market for beginners is learning about stock trading. Stock trading refers to the buying and selling of shares of publicly traded or listed companies. These include companies in various categories, market capitalization thresholds and more. There are sellers for every buyer in the stock market. Whenever you are purchasing 1000 shares for instance, someone is selling the same to you by all means. Similarly, when you are selling shares of stock, someone is present for buying them as well. The best way to learn share market and how the stock market works is to observe the relationship between demand and supply. You can only learn stock market trading if you follow the basic principle, i.e. whenever there are more buyers than sellers, then the demand will go up and stock prices will increase. Conversely, when there are more sellers than buyers, i.e. demand is less, then stock prices will decrease.

Here are the best ways through which you may learn how to trade in stock markets-

• Opening your account- The basics of share market for beginners will naturally depend upon suitably opening your account. You will first have to set up your demat account and then your trading account, followed by the linkage of the bank account to the same. There are numerous share market courses online that will teach you more about this aspect. Choose a suitable platform or brokerage with which you can begin trading. Some of the share market basics for beginners include tips on how to pick the right brokerage or firm to trade with. Keep an eye on commissions and other charges, speed of operations and so on.
• Read up as much as you can- Books are always a treasure trove of information regarding the stock market. They offer some of the most valuable insights that you will obtain anywhere. They are also comparatively inexpensive if you take seminars, classes and educational DVDs or other material into account. You will find recommendations readily available for beginners.
• Follow articles- Articles are a fantastic way for you to educate yourself on the stock market. You will come across numerous popular posts and other material online. You can keep following websites for investor education including the likes of Investopedia.com and its local or regional counterparts. You will find several options when you start searching with the help of Google Search.
• Get a good mentor- You can find a mentor who could be your relative, family member, friend, coworker, current/past educator or any person with a fundamental conception and basic understanding of the stock market. A good mentor will be one who is willing to help you understand things, answer questions on movements in the market, keep up the motivation when markets are tougher and cover all other aspects. A good mentor can make a big difference between failure and success. Online forums are also useful in recent times and they will help you get answers to all pertinent questions. You should however be careful of whom you trust. The majority of participants are not professional traders at all. Hence, take advice objectively and follow recommendations of market experts who can be trusted. Do your homework properly in this regard.
• Research successful market investors- Learning more about great investors from the past will offer more inputs, insights, perspective, inspiration and appreciation for the stock market journey. You can follow legends such as Warren Buffet, Benjamin Graham, George Soros, Jesse Livermore, John Templeton, Peter Lynch and Paul Tudor Jones along with Indian investors who have struck it big including the likes of Radhakishan Damani, Rakesh Jhunjhunwala and others.
• Start following stock market trends casually- There are several news websites and portals that will help you get access to information and resources about stock market trading. Beginners can start following these news portals for in-depth information while learning more about economic and market developments, third-party analysis and other investment aspects. Stock charts, headlines, fundamental information and other parameters should be carefully followed at least a few times each day. Television is a great way to get more exposure to the developments in the stock market. Even following relevant channels for just 10-15 minutes each day will be more than enough in this regard. However, be careful about the recommendations that you opt for.
• Consider paid subscription services- You may pay for trading ideas, concepts and subscriptions alike. Some investors may find it more suitable to observe and watch market and industry professionals as compared to learning lessons by themselves. There are numerous paid subscription sites that are available throughout the internet. Be careful about finding the right kind of service in this regard. Several paid subscriptions, particularly those promoted on Twitter, YouTube and others are often from individuals who claim to have garnered fantastic results. However, be careful since many of these are misleading and actually scams. Most testimonials are either fake or come from people who have simply been riding on some luck. Choose paid subscriptions from reputed sources and investors.
• Consider online classes, courses and seminars- You can find several stock trading courses and other online trading courses online. You will find numerous options available for seminars, classes and other such activities. You may even find free stock market courses although there are some which are paid as well. They may offer invaluable insights and knowledge regarding the market and particular kinds of investments. Most seminars will emphasize upon only a particular aspect of the market and how people have attained success through utilizing core strategies throughout the years. However, not every class or seminar may be paid although free seminars may sometimes be a rich storehouse of information alongside.
• Simulator based trading practice and buying initial shares of stock- With the online broker account being fully set up, you will have to venture into direct stock trading and do not shy away from investing a little amount initially. You can buy smaller amounts of shares, namely 10, 20 or 30 shares at the beginning for a small amount. This will help you get a feel of the entire process above all else. If you are still anxious about starting your trading journey with your own hard earned money, then you can use a stock simulator for getting some virtual trading practice. There are several online platforms and brokerages offering this facility to investors. New investors make a mistake of purchasing an excessively high number of shares for their first trades itself. This is avoidable; resist temptation to buy more shares and begin with trading smaller position sizes, working your way upwards slowly and steadily.
• Adhere to what Warren Buffet said- For the majority of investors, online trading or day trading, will not be outperforming the prospects of simply purchasing the entire market, like the S&P 500 and holding onto the same for several years. Warren Buffet, arguably the most legendary and greatest investor over the years, has recommended that individual investors should passively invest (buy and hold) instead of trying to beat the market by trading stocks all on their own.

Table of Contents

• Trading Strategies to be followed
• FAQ

Trading Strategies to be followed

There are various blueprints and strategies for trading in stocks. The commonest strategy is to purchase and hold. You purchase shares of stock and then hold onto them for several years. The opposite blueprint would be day trading, when you are buying shares and then selling them on the same day prior to the closure of the market. Every strategy will naturally have its own advantages and disadvantages. For instance, day trading may be costly since you are frequently trading. Furthermore, since the trades are less than a year by way of duration, any profits will be subjected to STCG (short term capital gains) taxes.

For keeping costs as lower as possible, iconic investors like Warren Buffet and others have recommended that investors buy and hold the full stock market. This is called as passive investing. It is a buy and hold strategy where you purchase a whole market index, usually something like the S&P500, as an exchange traded fund (ETF) or single mutual fund. By purchasing the whole index, you are fully diversified, i.e. you have shares in numerous big entities and not a single one. This will lower your long term risks.

Three other strategies can be observed across traders including momentum trading, i.e. buying shares of fast growing companies and selling them for a profit prior to their peak in prices, swing trading, i.e. using technical analysis for identification of a trading range and buying and selling shares then as the stock trades within that particular range and of course, penny stock trading, i.e. buying shares of very small companies whose stocks were trading for lower than a certain threshold per share.

FAQ

• Q: How can I teach myself the stock market?
  A:

  You can start by reading books, taking online courses, following mentors, taking advice and analyzing the market thoroughly. After gaining knowledge, you can practice with a stock simulator and then steadily foray into the market by setting up your demat and trading account.

• Q: How do beginners learn to trade?
  A:

  Beginners will first set up their demat and trading accounts while linking their bank accounts to the same thereafter. They can also practice on the stock simulator virtually or initially trade with smaller amounts to get a feel of the market. They can also learn through market courses, online classes, seminars, books, articles, television news and updates and so on.

• Q: Can you teach yourself a trade?
  A:

  You can teach yourself how to trade even as a beginner although the task is never easy. Trading will have an integral risk, indicating that it is easy to incur a loss. Trading will have a risk which is greatly inherent and prior to deciding on teaching yourself a trade, you should be aware of the risks and whether you are comfortable bearing them.

• Q: What type of trading is best for beginners?
  A:

  Swing trading is considered as the best trading form for beginners since it may be implemented even by those who have full time professions and other pursuits and also since it takes lesser time. Swing trading may be executed within only 15 minutes every day or slightly more. Swing trading may be done with smaller amounts of money as well.