Investment in the stock market can be made in two ways. You can invest via the mutual fund. In this case, your mutual fund company will handle the entire investment portfolio accordingly. In this case, you need
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Open a demat account
First of all open a
Again, long-term returns are further amplified by compounding if the investors reinvest their dividends also. Successful trading involves more than reading a few articles or magazines or books or watching business channels and the morons sitting in there who deliver 15-20 trading calls within a day. There are many so-called experts who suggest share tips. Their tips change between buy and sell call just within a span of 3 months according to the market condition. It is better to avoid these tips and experts. You should have a clear roadmap,
Here are some strategies or preparations to adopt before starting investment.
This trading method is a combination of technical and fundamental analysis and takes a position for long-term horizon between a year and 5 years accordingly. This type of trading works according to some news or certain changes occur or are going to take place in the country. Let’s make it clear with the GST as an example.
Impact on FMCG
With the implementation of GST, the overall tax rate has been lowered by 5-6% than the previous rates. Companies like Colgate-Palmolive, HUL, and Britannia will benefit from this move.
Impact on consumer durable
With the implementation of GST, the overall tax rate is lowered by 2% than the previous rates. Companies like Symphony, Whirlpool, Havells, and Voltas will benefit from this move.
Impact on Airlines
With the implementation of GST, the overall tax rate has lowered by 3% than the previous rates when a person travels to economy class. Companies like Inter Globe Aviation, Jet Airways, and Spice jet will benefit from this move.
Impact on Cement
With the implementation of GST, the overall tax rate is positive as GST has cut the tax by at least 5%. Analysts take an eye on Companies like Ultra Tech Cement, JK Lakshmi cement, Rain Industries, ACC and Ambuja Cement.
So after making the proper analysis of these sectors and the big guns in any specific sector, you need to invest in those companies with strong fundamentals. After the implementation of the GST, the stock market has started a bull run and it will be beneficial to the economy of the country in the long run.
Swing trading refers to trading at the eve of any big event. It is seen that many consumer durable companies make a profit during the festive season of September to December every year. These companies declare their quarterly results or performance report after the month of December, in January. So, swing traders buy the stocks of those companies during this festive season or just before the announcement of quarterly results. Then when the companies declare results in January, these investors sell the stocks and make a profit. There are many other events after which share prices go upward. Just like the Govt. of India announced the anti-dumping duty on the rubber products the
Day trading is also known as intraday trading involves trading in a single day. At very short time interval investors buy and sell stocks. Investors make use of technical analysis to find out and exploit intraday price fluctuations by making use of charts, daily moving average, stop loss, resistance, support etc. Day trading relies on small margin and frequent small gains.
The riskiest way of trading is scalp trading. Buying and selling shares takes place in minutes to seconds. This is one type of gambling. You can gain or loss crores within seconds or minutes. No fundamental, technical, qualitative theory or application of any method is useful in this type of trading. Suppose, you buy a stock at a lower price there is no guarantee that with any negative news it does not inch lower. It is seen that many traders make or lose millions by applying this type of trading style without making any fundamental and technical analysis.
Which Trading Style fits you better?
As a trader or an investor, you must consider a variety of factors while applying any of the above-mentioned trading styles,
- Amount of capital available
- Investor or trader
- Current market condition i.e., bull market or bear market
- Experience in trading
- Time horizon
- Risk tolerance
Trading in the stock market is a full-time job. It is much different from the investors who invest in any company or stock with a long-term view after making a proper analysis of Fundamental, Technical, Qualitative, balance sheet and profit and loss account of a company or stock. In general which trading style is best for you is a difficult jargon to solve since it requires a lot of experience in stock trading and high-risk appetite.