How to Invest in Share Market?

The First Questions Comes to the mind of person How To invest in the share market when he prepares himself for stock trading. Basically you should have a clear vision  what type of returns you want . Here We are giving you simple guideline that will be helpful for you for the online trading:

• Subscribe to a dealer or securities investment firm with ties to the Indian stock market. The determining factor in the recruitment of financial markets is an experience in which you invest your money. Brokers can be expensive, but tend to respond quickly to questions about individual actions.
• When a person want to buy/sell shares in the share market then he has to first place the order with a broker or can do himself using online trading systems .When you buy a share, the message is transferred to the exchange [either NSE or BSE ] and the order stays in the queue of exchange's other orders and gets executed if the price of that share comes to that value. Once you get the confirmation of this transaction, the shares purchased, will be sent to your demat account. The shares will be stored in demat account in electronic format.

What is  Demat Account and Why it necessary?

The Securities and Exchange Board of India (SEBI), has made it compulsory to open a demat account if you want to buy and sell shares in the Indian share market.

• Demat (short form of Dematerialization) is the process by which an investor can get shares (also called as physical certificates) converted into electronic form maintained in an account with the Depository Participant (DP).
•  DP could be organizations involved in the business of providing financial services like banks, brokers, financial institutions etc. DP’s are like agents of Depository.
• Depository is an organization responsible to maintain investor's securities (securities can be shares or any other form of investments) in the electronic form. In India there are two such organizations called NSDL (National Securities Depository Ltd.) and CDSL (Central Depository Services India Ltd.)
•  Investor’s wishing to open Demat account has to go DP and open the account.
• Opening the Demat account is as simple as opening the saving bank account with any bank.
• As you need bank account to save money, deposit cheques etc, likewise you need to have a demat account to buy and sell stocks in share market and to hold the shares.

Share Market Basics - Part I

In order to know what stock is and the basic meaning of stock market first we have to dive into the history of stock market specifically , the history of what has come to be known as the corporation. Corporations in one form or another have been around ever since one guy convinced a few others to pool their resources for mutual benefit. In order for a corporation to do business, it needs to get some money from somewhere. A stock is a piece of ownership of a company. When a Company needs some money, which is helpful in growing business, they acquire extra money by selling ownership in small percentages in form of stocks. The word stock trading is commonly used to describe both the physical location for buying and selling (trading) stocks as well as the overall activity of the market. 

The strategies you need to know to maximize your wealth and the pitfalls you need to avoid are not beyond comprehension. Even if you feel that you don’t have the time, and prefer to entrust your money to a portfolio manager or mutual fund, the least you need to know is which funds are better, how to choose your fund manager, and keep a tab on its performance. There are two analytical ways in investing in stock market, technical and fundamental analysis

Technical analysis is based on prices and volume. Technical investors believe price and volume interpret every thing in the market. They study charts for forecasting of future stock price or financial price movements. For learning technical analysis academic knowledge isn’t required, with every level you can learn it.

Fundamental analysis is a stock valuation method that uses financial and economic analysis to predict the movement of stock prices.

The newbie investor is advised to investigate some of these basic strategies and see for himself how they perform. Stock trading closely follows the economy of a country. When the economy is doing well, the market is bullish. Before investing in the stock market you must choose a stock broker. A stock broker is who performs the various transactions in financial instruments on a stock market as an agent of their clients. There are basically two ways to trade the stock market- using effective stock trading strategies or shooting in the barrel. There are numerous stock trading strategies. Of all of these, there are a couple of tried and trued methods that have worked well for investors over many years.

So many people invest in these stock markets but only few percent of them can only make money. They make common mistakes and you should avoid them by high level of understanding by the information given.

Things to know about stock markets

“Stock market” is a term used to describe the physical location where the buying and selling of stocks take place as well as the overall activity of the market within a particular country. The correct term to be used in pertaining to the physical location for trading stocks is “stock exchange.” Every country may have a couple of different stock exchanges that are usually traded on only one exchange although a lot of large corporations may be listed in several different locations.

The ubiquity of stock exchanges makes it possible to buy or sell stocks throughout the world. The only restriction to stock exchanges is time. Different exchanges may have differing opening hours based on their local times. The major stock exchanges in the world are the Tokyo Stock Exchange of Japan, the Bombay Stock Exchange of India, the London Stock Exchange of United Kingdom, the Frankfurt Stock Exchange of Germany, the SWX Swiss Exchange of Switzerland, the Shanghai Stock Exchange of China, and the New York Stock Exchange, the NASDAQ, and the AMEX of United States.

The economic health of a country is closely followed by stock markets. Bull markets occur when a particular nation experiences high economic production, low unemployment level, and low inflation rates. Bear markets, on the other hand, follow the down trends in the economy. Such indicators of economic downfall are increased unemployment and inflation. These causes the fall of stock prices.

Supply and demand, which are determined to a large extend by investor psychology, also influence the fluctuations in the prices of stocks. A rise in stocks may cause a lot of investors to jump into the bandwagon which later drives the price even faster. A falling price, on the other hand, can drive the same effect called short term fluctuations. After such runs, stock prices tend to normalize.

Aside from the stock exchange, other popular markets that offer many investment opportunities include the Foreign Exchange Market (FOREX), the Futures Market, and the Options Market. The FOREX is the biggest investment market in the world, in terms of trades and values. The traders in a FOREX buy one currency against another and profit from small changes in the value. Most FOREX trades are entered and exited in a 24-hour span so traders have to keep a close watch on the market in order to make profitable trades.

The futures market is a market of contracts where goods are bought and sold at specified prices and times. The desire of most buyers and sellers to lock in the prices of their goods for a future delivery despite the market conditions resulted to the existence of the futures market. The market conditions can make the actual futures contract to fluctuate considerably in value. Most of the investors in the futures market are mainly interested in the profit that can be realized in trading contracts and not in the actual goods.

Another alternative market is the options market. The options market is quite similar to the futures market because it also features a contract that gives the right, and not the obligation, to trade a stock at a certain price before the specified date. These can be traded on their own or purchased as an insurance against price fluctuations within a specified time frame.

The FOREX, the futures market, and the options market are all quite risky markets that require a considerable knowledge and experience to prevent any substantial loss. These also require a very close attention to the different market movements. As compared to the three, stocks are considered to be less risky because the movements of the market are usually gradual and although short term investment strategies are possible, a lot of people view stocks as long term investments.