Essentials Of Entering The Share Market

By Author: SamJacob Thomas
Total Articles: 40
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A firm understanding of the basics in any field allows us to venture further in it. The share market is no different. Clarity enables one to make most out of it whereas confusion turns into a gamble. So let’s understand the ABCs of share market in the simplest way from a practical point of view.

An online share market also commonly referred to as stock, equity or capital market is no physical destination but rather a huge network of transactions of trading stocks and derivatives of companies listed on the stock exchange. Though the terms above are not perfectly synonymous, generally their meaning is derived contextually. The best place to start is to understand the basic terminology such as shares, scrip, securities, equity, brokerage and so on. In India we have two major stock exchanges – The National Stock Exchange or NSE and the Bombay Stock Exchange or BSE.

To participate in the Indian scenario of stocks, one needs a saving banks account or a checking account. Investing in a company means to buy its shares with the purpose of growing your profits along with the company’s growth. Trading on the other hand ...
... means to keep buying and selling from time to time with the motive of profiting due to fluctuations in the scrip’s price. Whether investing or trading, both come under equity trading which means buying and selling of company stock shares.

Now when shares of any company are bought, held or sold, they are stored in electronic form in an account called the Demat account. It may be opened with a bank or stock broking houses registered with the stock exchanges. Naturally some start-up capital is needed to buy or sell. This is sourced from the savings account as per the investor’s instructions. The pay-out is also directed to the same account.

Other than these physical arrangements, common sense and understanding play an important role in determining any investor’s success irrespective of the investment’s value. The most popular misconception is that markets are a risky business. So is everything without proper knowledge, even crossing a road! If something is unknown to you, it can be easily understood through various resources such as expert-talks, books, articles, news, etc.

Here are some quick tips for your first step into the land of opportunities. Firstly evaluate your purpose and your capacity. Put in what you can afford to lose. It is not guesswork but rather minimizing your risks through informed actions. Secondly, do not let you instincts rule right from day one. Instincts in equity trading develop with experience. Emotions like fear, excitement and greed are the usual culprits behind losses. Objectivity matters. Thirdly, keep educating yourself. Having a plan and a budget are the primary pillars of investment discipline. Both will depend on your financial goals and ability. Diversifying your portfolio will ensure balance in earnings. Lastly do remember that losses are a part of the deal. The idea is to earn way more than what you lose.