- by Stocktry Expert
- 20th Aug 2020
Effective Share Trading Tips for Share Trading Game Beginners
Stock markets have always caught the fancy of investors looking at inflation-beating returns and wealth generation. However, making money in equities is not that straightforward. It requires patience (a lot of it), an inherent understanding of the way the market functions, and in-depth research and analysis, among other things. If we take a quick look at the way the markets have responded to the pandemic in the last few months, it has been a roller-coaster ride. With high market volatility and an uncertain outlook, most investors found themselves grasping at straws to make the right investment decision. Here are some tips that can help you.
The Great Divide: Trader or Investor?
To start with, you should first understand the difference between a trader and an investor. A trader is someone who might buy stocks and might sell the same within minutes, hours, or days. An investor, on the other hand, is a long-term market participant who can hold on to his purchases for several months and even years.
You should clearly understand the difference between the two and know what you want to be. This is because trading strategies do not work for investors and investing strategies fail to work for traders. So, pick a side at the beginning as this will work as the foundation of your stock market journey.
Selecting a Stockbroker
One of the most important decisions that you'd be required to make at the start of your trading journey is to pick a stockbroker. There are several stock brokers in India, and the selection can be difficult for beginners. Focus on factors such as the reputation of the broker, trading portal or software, and brokerage to make a decision.
Give special attention to the brokerage as you will be required to pay it irrespective of whether you make profits or losses on a trade. The brokerage can either be a flat fee or some percentage of the trade value. This is especially important for stock traders as the brokerage of multiple trades adds up very quickly.
Understand Different Types of Orders
To help traders who cannot spend long hours in front of the screen when the market is live, most stockbrokers now offer many different types of trade orders. Some of the most common types of trades are Normal, Stoploss (SL), Margin Intraday Square up (MIS), Bracket Order (BO), Limit Order, and Cover Order (CO).
Understand how different types of orders work to be a knowledgeable trader. If you are looking for how to invest in stocks for beginners with little money, it is better to stick to normal and stop-loss orders. Normal orders can only be placed if you have the required capital for the purchase available in your trading account.
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