Steps to Investing
Before we start discussing how to start investing or trading or your first steps to investing in the stock market, lets put out a statement - Investing in stock market is like building a relationship. You'd have to keen and deeply interested in it, know as much as you can about it and keep your head high throughout!
You will be excited right at the start, but all it needs is persistence, understanding and patience. This is pretty much any relationship might need as well! Right?
Now, since we have built this establishment, we can dig deep on first Steps to investing or trading and understand what are the potential aspects that you must take care throughout your existence in the stock market.
Here is the summary of all the steps:
Step 1 - Get a PAN Card
The first and the foremost step of your journey towards the world of stockbroking is the necessity of a PAN Card. And getting a PAN card in India has never been easier before.
Step 2 - Choose a Stock Broker
In order to choose a stockbroker who can later help you to trade in the stock market, you need to understand how the Indian stock market works. Basically, there are two types of stockbrokers - Full Service and Discount. There are multiple aspects that are crucial before you pin down on a particular stockbroker to go ahead with.
You can refer this article about Top Stock Brokers in India for reference. Once you are sure to go ahead with a particular broker, the next thing you need to do is open a demat account.
Step 3 - Apply for a Demat Account
Once you have finalized a particular stock broker of your choice, Bravo! Pat yourself on the back because it is one of the trickiest aspects of the whole journey. Now you just need to provide your contact details and pretty much any prominent stock broker will come back with a callback.
Step 4 - Start Studying
Yup! Before you put any capital out there on the market, it definitely makes sense to understand where you are going to put your money. There are so many resources you can rely on to start with. Some of those are listed below:
- Books on Trading and Investing - Few examples include
- Guide to Indian Stock Market
- Kaise Stock market Mein Nivaise Kare (Hindi)
- How to Make Money in Stocks by William O’Neil,
- The Winning Investment Habits of Warren Buffet and George Soros by Mark Tier,
- Tradeniti - Kaise Bane Safal Professional Trader (Hindi Book)
- Everything You Wanted to Know About Stock Market Investing
Step 5 - Follow the Market Every day
Yes, once you understand the basics (as mentioned in Step 4), it will become relatively very easy for you to gulp and understand the market dynamics. For a start what you can do it, narrow down on a list of let's say, 20-30 prominent stocks and start understanding their behaviour. You need to see how these stocks have moved in the past along with the present day movements.
Step 6 - Create your FIRST Strategy
Since by now, you know that you are here for trading (high risk, high returns) and/or investing (low-risk, time taking income-producing stocks) - your strategy of stock picking and other related aspects will go with that thought in mind.
Step 7 - Keep Tracking & Learning
So once your capital reaches the market, then obviously need to track market movements as per your portfolio along with other potential opportunities. Be wary of any news related to the stocks you have invested in, any industry related changes, any corporate or management related changes, new entrants into the market, potential foreign threats or opportunities and a lot more.
To know more about all these steps, you can check this detailed review on First Steps to Investing in the Stock Market.