Do you know what makes every beginner procrastinate when it’s about investing in the stock market? It’s either they are afraid of losing their money or feel incapable of becoming a pro. The good news is you have put your effort in learning what are shares and how to invest in them. This post has compiled nine stock market hacks that every beginner should know.
1. Differentiating Traders from Investors
A trader can purchase stocks and sell them immediately or within a couple of minutes/hours/days. But an investor is an age-old participant who may choose to hold onto the purchased shares for months or years. Understanding the difference between an investor and a trader is important. After all, trading strategies won’t work for investors and vice-versa.
2. Requisites of Stock Market
After choosing one share, the next step is to consider the investing procedure. Before investing in the stock market for beginners, always get a fair idea about:
- Timings of the stock market
- Who a stockbroker is
- How the share market moves, and so on
3. Checking for ‘Stop-Loss’ Option
On the selected trading portal, you shall check for the order screen. You will notice the ‘stop-loss’ option. It helps in alleviating the losses by letting you choose the price to get squared off automatically. One who wants to understand the best way to invest in stocks has to use stop-loss on the trades, especially the initial ones.
4. Finding the Right Stockbroker
In the start of your share market trading journey, you’d require hiring a stockbroker. While the market remains loaded with a myriad of professionals, you often get confused to choose one from the many stockbrokers. That’s why you need to follow a set of factors, including trading portal, broker’s reputation, etc.
5. Learning the Different Order Types
Stockholders offer a wide range of order types. This move has helped many traders who can’t spend hours to check the shares right when the market goes live. The following are the common order types:
- MIS or Margin Intraday Square up
- CO or Cover Order
- Limit Order
- BO or Bracket Order
6. Keeping Your Interests Away from Margin Facilities
One of the common issues for share market traders is the lack of capital. Stockbrokers offer margin facilities in order to resolve this problem. Despite being useful for professional traders, it may result in serious losses for a beginner. Margin facilities can only get beneficial after gaining experience.
7. Avoid Short-Selling Initially
Even when the stock price falls, there’s a chance of making money. It’s none other by short-selling (the opposite of placing one buy order). A buy order lets you purchase the stock at a lower price and get a higher selling price. Your profit is the difference in the price (multiplied) by the total share number you purchased. With short-selling, you can take advantage of a declining market. However, it’s justifiable to master the basic rules for buying and selling shares initially. Only then can you experiment with short-selling eventually.
8. Don’t Consider the Derivative Market
The ultimate stock market hack for beginners is to avoid trading share derivatives (the market that includes futures options). These contract-oriented purchases have a fixed date of expiry. As it allows making bigger purchases within a tight budget, it looks extremely attractive. But they aren’t suitable for beginners, unlike professional traders.
9. Taking a Note of These Dos and Don’ts
Before you invest your money in the share market, keep a note of the following dos and don’ts and avoid common blunders.
- Do start with a small capital
- Do use one demo trading account for improving trading accuracy
- Do diversify investments in case you’ve long-term goals
- Don’t get emotionally attached to shares
- Don’t choose IPOs at the beginning of your trading journey
When you follow these nine share market hacks for beginners, paving the path of success becomes simplified. But do understand and keep one thing in mind for always – there’s no shortcut to quick money in the stock market. What you invest will get returned doubly, only when you make smart moves.