How to learn to invest in stocks

I am sure that you must at least once, would have thought of learning to invest in stocks after reading about warren buffet or any other successful investor. Without a doubt you must have made a plan to how to go about it. But at the end of the day you must be clueless about whether you will get results from it. Don’t worry that is where I come in to play. Today I will be giving you a few tips about how to increase your knowledge about the stock market and simultaneously start investing that will help you learn faster.

Which type of trading interests you?

There are many types of trading, but here I am talking about Intraday and delivery trading. In Intraday trading, the trader buy and sell stocks on single day, whereas, in delivery trading, the trader buys the stock and hold it for longer period before selling it.

You must decide which trading you want to go into. Both types of trading have a different approach to go about.

Learn about the market.

stock market

This one is the most basic. You must have the idea about what is the stock market and how different things operated. Different governing body, rules and regulations, etc. Google and YouTube should provide you with sufficient information.

Read newspaper/Business magazines.

You need to be updated about the current situation of different company. A good news about any company will bring the stock of that company up, whereas, a bad news will do the opposite. If you want to be an Intraday trader this latest new will matter to you a lot. If you are a long term investor this news will still matter to you but long term performance of the company will matter more.

So make a habit of being updated with news of different company. If you want, you can take subscription of a business magazine.

Learn about the company.

You need to thoroughly understand about what the company does and the factors that affect the company’s performance. This factor would differ from industry-to-industry. An  old, reputed and big company is perceived to have low risk on the other hand, a new, small company is considered to be with high risk. Those company with high risk also offers high return.

There are few points that you must look in a company

• What are the product and services of the company, do they have the potential o increase the sale in the future.
• How effective is the companies research and development programs
• How strong the company’s sales force is?
• Does the company have a good profit margin? And what measures are company taking to increase the profit margin.
• How good customer, executive and labor relation does the company have.

And the list goes on-and-on, but I am sure you must have got the idea about what to look for in a company.

Play virtual trading games.

If you don’t have a fund or if you are afraid of taking risk, then this one is for you. You can find many virtual trading game where you can trade in real time, only difference is that you will not be using real money.

This the best way to learn Intraday trading. The I would recommend you is moneybhai from moneycontrol.com

Arrange funds.

Don’t worry, I am not talking about huge fund, small fund around 5000-10000 rupees is what you need to have. Our goal is to just check if we are able to make a profit, how good are we in understanding the trends and making prediction. So a small amount will be more than enough and if you become good at trading you will eventually convert that small amount to big one. Or you can allocate a fund for investing in your monthly budget.

One trade daily.

This one is for those who want to make a career as Intraday trader. Make at least one trade a day; it need not be of huge amount. You should repeat the cycle of doing your analysis and buying shares based on that analysis and check for results. If you suffer loss, check for the reason behind it. Do this every day and you will be good at trading in 3 -4 months.

One hour a day to learn about the financial terms used in the stock market.

The terms used in finance are too confusing for anyone to understand at first. So dedicate only one hour to learn about the different terms used in trading. Google will help you with this or you can take help of any other financial website.

In just 2-3 weeks you will understand the majority of terms used in trading.

learn why stock price change here

Associate yourself with the correct person

This one is that is personally recommended by me. If you have a friend that is good at trading, do talk with him/her about his view about any particular company. This will help you a lot.  You can read many books, but talking to someone in the field will help you learn faster.