Stock trading baffles even the shrewdest people on this planet. Only an avid investor can take the stock market and perform stock trading to yield a good profit. The world, however, still remains skeptical of stock trading despite admitting that it has a good set of benefits.
Pre-Requisites for Stock Trading
While stock trading may excite you; you cannot just suddenly wake up one day and decide to start with stock trading. There are certain things you need to have and the procedures you need to complete before you can start with stock trading.
- You need to be a tax complaint individual and be over 18 years of age to obtain the basic pre-requisites for stock trading.
- You need to be registered to the Income Tax department and you need to have all your documents with the government updated.
- You need to have a stockbroker who will execute deals on your behalf. Even if it’s just an online website, you need to have an account opened with them in order to trade.
- You need to have a ‘Demat’ account which stands for Dematerialised Account. This account is where all your stocks and investments are held in Dematerialised form.
- You need to have a stockbroker, a ‘Demat’ account and a strong internet connection to start off with your stock trading.
The Fundamental Rule of Stock Trading
There are a lot of rules and guides for stock trading as well as Forex trading and you may get confused as to which one you should follow. However, there is one fundamental rule that never changes and that is that you need to buy low and sell high.
- This means that you need to buy a stock when its price is low and sell the stock when its price is high.
- The difference between the price at you which you bought the stock and the price at which you sell the stock is your profit.
- This rule may seem simple, but it takes good trading acumen to figure out if the price of a stock will go higher or lower from the current price.
- Only people with superior abilities to gauge stock trends are able to navigate the stock market deftly and yield profit for themselves.
Reasons to Opt for Stock Trading
Stock trading involves navigating the stock market which is a rollercoaster full of ups and downs. This may make you wonder if the stock trading is really worth it since not opting for it will lead to less financial turbulence.
- Stock trading makes your money work for you. The money that would have been lying idle in your bank account will now be used to generate profits.
- It allows you to make money over your current salary. It allows you to augment your income by making more money from the stock market.
- It allows people to save for their long-term goals like buying a house or a car and helps them achieve it.
- It allows people to invest in their country’s growth story.
- Stock trading is subject to market risks so keep that in mind while trading.
- Sometimes your predictions may end up being incorrect and you may lose money so keep this in mind while making your portfolio.