Hy, welcome back. In this article, I will share my personal experience about the stock market journey as a beginner and keep these things in mind which will definitely help you in your stock market journey.
It is always easy to learn from other mistakes and from their experience as well. Before investing a single rupee into the stock market there are few must-know things you need to understand.
So let’s get started.
Choose the right broker
Your entire stock market journey starts with creating a Demat account in a particular broker. In the early days, everything was offline. You need to submit a lot of documents to the broker to start with stock market investment.
As you know we live in 2021 where we can get everything online. So I do suggest you go with Retail brokers like Zerodha. Personally, I have been using Zerodha for the past few years and there is no issue.
The best advantage is you will get 100% transparency for the transaction and amount which is deducted for broker charges etc. They have their own API features so that you can try Algo Trading as well.
Every Single Strategy Works
If you are using a scalping strategy or if you’re doing intraday or swing trade with various different strategies then all those strategies will work.
Choosing a 100% to accrue strategy never works. You need to understand there is no such strategy available that gives you 100% profitability. The most important thing is consistency on the same strategy for a longer period of time.
Select one good strategy with a combination of trend and momentum. Keep the same strategy for a longer period of time with a good risk to reward ratio so at one point you will understand how your strategy will work and how it is giving you returns.
Don’t judge any strategy just applying for one time. If you do that you will end up in confusion and an infinite loop because there are a lack of strategies available.
Take some simple strategies and add a risk-reward ratio as 1:2. That’s it.
Don’t fall for the penny Stock
One of the beginner’s mistakes and trust me I have never added a single rupee in penny stocks. Basically penny stocks have lesser volumes traded and the price of the single share is so less.
Penny stocks are beginner traps. It is much cheaper when you compare it with large stocks. Because it is cheaper it doesn’t mean that it is better to invest.
Sometimes it is okay if you are doing some intraday on Penny stocks but still, it is risky due to the lesser volume to trade.
If you are doing long term investment, go with good fundamental stocks and understand the basics of price action in the stock market.
For example, I have invested in Infosys, Reliance and D’Mart. I have done my basic research on the fundamentals of the company and added a portion of my capital into these stocks. Whenever I get good profit or some indication then I will close my position.
Basic Understanding of Charts
You don’t need complicated designs in a chart to make money or to invest in the stock market. You just need to understand the basic function of how the stock market works and price action works. You can try with a Simple Moving Average. That’s all it takes you to start with.
If you make it complicated then you will be in trouble, it makes you so confused with the trading system. So better keep it simple and slowly you go forward.
I always suggest going with swing trade which will be more profitable for beginners. As an investment, you can start with SIP or Mutual Funds.
Don’t get bored
Example: What are support and resistance? Why is the price getting reversed from a particular level or zone? Recommended go with 1 hour, 2 Hour or Day Charts which will give a wider perspective on the price movement. The small time frame will create more confusion.
If you’re really interested in the stock market or to learn about it, the best thing you can do is spend time on the charts and fundamentals of the company. Try to understand their quarterly results, how they are profitable and why they are profitable. So building any strategy is secondary, first, try to learn the basics and spend a lot of time in the charts.
Start with Small Amount
Trust me, I started with ₹10,000 and the same amount I used for more than 2 months to get sufficient confidence to trade or invest in the stock market. I am working in an IT company so I will get a salary every month. After 2 to 3 months I started to add ₹5,000 into my Demat account to trade.
Trust me, don’t look at a profit in the first year. If you are making +10 Rs it is worth it. Just focus on maintaining the account without blowing the entire account. Keep only a few good stocks on the watchlist. Don’t include a lot of stocks because you will get better opportunities there. If you are profitable in your initial ₹10,000 to ₹25,000 then the same strategy can apply in lakhs of rupees as well.
Building a trading system including risk-reward and good psychology about the stock market and money will make you much more profitable in the coming years. Always keep a habit to track the money flow and how much profit or loss you are doing. We all are beginners and will achieve a great high in our future.
If you have any concerns or want to share your ideas please submit them to us in the comment section.
Thank you for your time.
All the best readers!