How to Start Trading Online

Online Trading
Online Trading

Online Share Trading

Like everything else, it is very important to understand the basics of online trading. The process of learning should start slowly, systematically and with basic principles for deep and accurate understanding. There are several steps involved before starting online trading, and it starts with increasing financial knowledge.

Knowledge of the basics

As a trader or investor, you need a basic understanding of the financial terms and factors used to evaluate a company. However, this is not something that can be achieved very quickly, but you will need to strengthen your skills.
Many fundamental signals are used to evaluate a company like earnings per share, P / E ratio, book value, value/book value, return on capital employed. All these metrics help to gather a basic understanding of a company's health. To invest, a company must have a good financial structure and a healthy balance sheet.
There are many online trading books available that provide a basic insight into the factors to invest and consider. People who are not much to read can watch video tutorials offered by various websites for free.
You can check out this detailed review on the top stock market education books, learn from our stock market education section and also subscribe to the AuditBlogger YouTube channel for further understanding.

 

 Make sure you know the basics before investing your hard-earned money and start trading online.

Dummy Portfolio

Before starting actual trading, that is, before putting real money, one should always do paper or dummy trading. In dummy trading, a trader selects stocks that they think meet all investment standards. Then they should track their dummy portfolio for about a week.
If portfolio and individual stocks perform the same as expected, this is a good sign. If not, the user should analyze what went wrong.
The dummy portfolio offers a unique opportunity to learn through mistakes and at the same time not waste money.

Study of stock

Some of the world's largest investors and traders believe that everyone has their own way of investing. While some traders go for fundamental analysis of the company, others believe in technical analysis, and some prefer both.
Fundamental analysis is based on financial statements such as balance sheet, income statement and cash flow statement. These financial statements are regularly published by the company and are readily available online.
Under technical analysis, traders perform price and quantity analysis to take a stock position. Moving averages, Bollinger bands, RSIs and other indicators, along with price and quantity, are used for long-term entry.
Technical analysis is not widely popular in terms of fundamental analysis, but experienced traders often go for a good combination of the two to get into winning trading.
Therefore, it is important for beginners to start trading online and to know about these indicators before they start trading online and this is very important.

Adhering to the market

There are many TV channels and other sources available online that provide information on all the factors affecting the market, economy, and market. In order to start trading online, it is important to look at the news channels and websites that provide real-time growth news in the stock market.
Traders should know about stock, sector, and economy (both local and global) specific news about how much exposure they want in stock.
Occasionally, it may happen that you have taken a position in a particular stock, and there is a flow of some negative news. After the regular market, you will often get some indication of imminent news. Such events can drastically reduce your capital.
At the same time, being aware of news and events gives traders an upper edge in the selection of new stocks or excludes stocks from the portfolio, which can lead to a loss.

Use of target and stop-loss

A trader should always have a clear idea of ​​the possibility that the stock is in the near term.
But, the stock market does not always work as expected. For such situations, a trader should always work with a stop loss. It takes into account the losses and saves capital.
In a bull market, traders usually revise their profits and hold stop losses in order to make more profit. Even the most experienced trader uses stop loss.

Risk - Profit ratio

When determining the target price and keeping stop loss, a trader must decide on the risk-reward ratio.
This mainly suggests the risk that a trader looking for a profit is willing to take a risk for it. Generally, the risk-reward ratio is 3: 1, which means that profits should be 3 times the risk as expected by the trader.
If you are not sure about generating a three-fold return of risk before taking a position in a specific stock, then it would be better to look for another stock. A trader is free to choose his risk-profit ratio based on his risk appetite.

Intra Day Trading

A new trader should always start with intraday trading, where the trader usually opens and closes the position on the same day.
The trader can take a long or short position depending on the direction and volatility of the stock. The idea of ​​intra-day trading is that the trader should not take the position overnight as it is risky, according to the fact that after the market hours there may be a lot that can adversely affect the stock price the next day.
Traders, who are in the learning phase or with limited capital, should learn to save capital first rather than taking unwanted risks.

Distribution of portfolio

We have been hearing for a long time that 'don't put all your eggs in one basket' and the stock market is a good example of this. Be prepared for the long term or short term, a trader should always diversify his portfolio.
They should focus on different areas, rather than taking too much risk in one or two areas. Such diversification helps to reduce portfolio overall risk.
Diversification means that a trader should never invest more of his capital in a single trading.
For example, if a trader has taken a new position in an automobile and an auto-accessories stock, this is not diversification in the truest sense. Auto-accessories are largely dependent on automobile stock.
Similarly, the FMCG area will have a direct impact on the packaging sector. Therefore, diversification should always be based on broad areas such as banking, auto, FMCG, capital goods, metals, etc.

Adopt technology

There are various finance apps available for iOS and Android which provide detailed data about the sector and stock. As a trader, you should be aware of various important information like promoter stake, key stakeholders, mutual fund preferences, etc.
In addition, there are various short-term trades in the market, such as wholesale deals every day.
Generally, finance apps will display all the wholesale deals that give you insight into the stock's outlook.
Alerts from stock-specific news, brokerage houses, futures and other things among the option data are some data points that help traders a lot in choosing a winning deal.

Follow but do not copy

There are many instances where traders or investors indiscriminately follow the portfolio and trading style of large investors. Over time, he realized that his portfolio was not giving him that kind of return, while investors, whom he followed, were making healthy profits.
Read Also: How to Earn ₹ 4,000 Per Hour Without Investment [ 9+ Tips]
Well, the real issue is that these big investors are market makers and we cannot follow all their trades, time to buy and sell, the price at which they have bought shares and the number of shares accustomed. Together these factors provide them with winning trading.
Therefore, the idea of ​​investing in a particular investor is always better than mimicking its portfolio.

The points mentioned above are not a follow-up list for online trading but are based on the experience of successful traders. They have helped many people to profit from the stock market. So, you can do the same.
If you want to start trading online, feel free to share some basic details below.

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