Investing in the stock market may be challenging, especially for those who are new to it. Individuals may now allocate their assets to shares through numerous digital channels, making the investment procedure easier. If you’re a beginner then you must be unfamiliar with the procedure. Here in this article we will cover the basics of stock market. It is advised to only invest money in stock market once you have complete knowledge about the procedure and uncertainties that will arise in future. Remember, your money is precious, don’t invest in places you do not have a good knowledge of. You can always try Virtual Investing first to get an idea of how the process works.
Let’s start with stock market.
- What is a stock market?
The stock market is a place where people may purchase and sell equity shares from other participants in the stock market (buyers and sellers of stocks). Here you should learn that Companies do not allow general public to sell or buy their shares from them. They only allow certain people to do so. These people are called brokers. A Broker is a person who purchases or sells investments/stocks on behalf of the investor/trader in return for a commission. Only brokers are allowed to buy shares directly from them. Zerodha, Groww, Sharekhan, Upstrox, Angel Broking are some of the most famous brokers in India.
- Here in stock market you can keep the shares for long run or buy and sell them within a day.
- The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) are the two largest stock exchanges in India, where the majority of stock trading takes place.
- T+2 is the format for the settlement cycle. That means the trade cycle takes two days to complete from commencement to final settlement. If you have sold your shares then the amount will take 2 days to get reflect in your account.
- You need to choose a broker to start your trading journey. Your broker will open your Demat account and Trading account on your behalf which are important to you to begin your investing journey.
Now before you start, here are the basic stock terminologies that you should know:
- Agent – In the stock market, an agent is a stock brokerage business that buys and sells shares on behalf of the investor
- Demat Account – Demat account is used to store shares and securities from a variety of firms electronically. When you purchase shares or securities, they are credited to your demat account, and when you sell them, they are deducted.
- Trading account – In the stock market, a trading account is used to acquire and sell equity shares. Buyers and sellers do not need to be physically present at the stock market to make orders using the online approach. Instead, they create a trading account with a registered stock market broker, who handles all of their trading for them.
- Trading Time – The time at which the investors can trade in stock market is called trading time. A normal trading session starts from Monday to Friday, 9:15 a.m. to 3:30 p.m.
- Bear Market – A bear market is a time during which the price of stock shares continually falls. It’s commonly defined as a 20 percent drop in share prices from recent highs.
- Bull Market – The polar opposite of a bear market, a bull market is one in which stock values rise over an extended period of time. At any given time, a single stock or sector might be bullish and bearish.
- Ask/Offer – The lowest price at which the owner of an equity share is willing to sell the share in the stock market is referred to as ask/offer.
- Bid – The highest price that a stock buyer is willing to pay for a particular stock.
- Blue Chip Stocks – These are equity shares in well-established and financially sound corporations. The market capitalization of these stocks is usually rather large.
- Board Lot – You can buy any number of shares but some can only be traded in particular number. It’s called a board lot. Each exchange board establishes a standard trading unit based on the per-share price. 50, 100, 500, and 1000 pieces are some of the most prevalent board lot sizes. That means you have to buy them only in the size mentioned above or their multiples.
- Open Price – The price at the start of a trading session is referred to as the open price or simply open. It might differ from the previous day’s closing price or not.
- Close Price – The final price at which a company’s equity shares are sold or traded on a given trading day.
- Volume – It displays the average number of stocks traded over a given period of time, often the daily trading volume.