CAPITAL MARKETS :
Capital market or share market (as it is commonly called as) is a combination of buyers and sellers ( day trading ) not physically connected. It is a platform where trading can be done online between buyers and sellers.
Many people say that it is a type of gambling but I truly believe that it is not gambling; not a game of teen Patti, poker or betting as you do not lose your whole capital invested.
The risk is calculated and anyone can earn a decent amount of money with proper knowledge and experience. There are various vehicles in which you can trade like equity stocks, futures, derivatives, index futures, options, commodity and forex (foreign exchange).
You get some leverage while trading with these vehicles. The more the leverage, the more is the risk. The more you invest, the more you can earn/lose. Investing in markets can be done in three types:
- Intraday trading – 1 day
- Positional/short term – 3 days to some weeks
- Investment/long term – 1 to 10 years
People who invest for long term are called investors, people who trade for short term are called swing traders while those who trade within a day are called as day traders/intraday traders.
To start trading, you require:-
- A trading account
- A Demat account
- A savings account
Generally, trading and demat accounts are combined created which are then linked to your savings account. A trading account is used to buy or sell the shares while a demat account is used to store the shares (in case of delivery).
These accounts can be created with a broker for a minimum charge. I would suggest you to find a flat broker as the brokerage is less. Remember, the broker must be SEBI certified.
As this field is very vast and gaining knowledge about each and every aspect of stock market would take us some years. So, I prefer to day trade as gaining much knowledge is not required here.
”You can earn a decent amount of money every day and as you do not carry shares overnight, you can sleep relaxed.”
Intraday trading is considered as a risky but very profitable business.
Types of intraday traders:
- Scalpers – few seconds
- Momentum traders – few minutes
- Intraday traders – whole day
We need to decide which type of traders are we?. Here, you need to focus on three important aspects:-
- Stock selection
- Risk management
- Profit booking
Beware of the “I know it all” syndrome as it may lead to huge losses. There is no trader in the world who has never lost money in stock markets. Loss is a part of this game. Losses are bound to come but our aim is to minimize losses and maximize profits.
Accepting the loss and moving ahead is a major part then only can you sail through the stormy winds of stock market.
Remember that your money is hard earned, don’t invest it without acquiring sufficient knowledge. Many people think that they can never lose in stock market as they have knowledge about how to trade. This is a wrong attitude as merely having access to a chart does not give you the ability to understand what is right and what is not.
If this would have been the way, then everybody in a hospital would have become a doctor. Trading requires knowledge, experience, and patience as well as risk management.