For some people it takes weeks and months and even years to decide whether to enter into share market or not because of following reasons.
- The share market is considered to be only for brokers and highly experienced professional so common people stays away from it.
- Still most of the Indians consider the Share market is risky and money loser business/job.
- Lack of awareness due to absence of advertisement.
- Lack of training and guidance.
- The last but not least that people think that share market requires a lot of capital to invest or to trade.
Likewise there are lots of rumors which keep most of the people away from Share market. But the truth is like any other business/job, the share market also requires knowledge and experience. As every field requires knowledge and experience to get success likewise is the share market.
What is Share and Share Market?
What is Share?
The public limited companies have shares. Share is nothing but the Ownership of the company divided into small parts and each part is called as Share or Stock.
For example – If you buy a share of any company then you are the owner of that company. “The ownership depends on the number of shares you hold or the percentage of shares you hold”. A founder, chairman or board of directors hold, mostly, majority of the shares of the Company so they are considered as major decision makers.
What is Share Market?
The general term ‘market’ is the place where buying and selling takes place likewise Share market is the place where the buying and selling of shares take place.
Now a days due to revolution of internet and computer the buying and selling of shares can be done from anywhere in the world with the help of computer and internet connection. Due to internet and advanced technology there is no need to present physically in exchanges like NSE and BSE but in fact the buying and selling of shares can be done from anywhere, where there is a computer with internet connection. One should have a demat and trading account, computer and internet connection and he/she can start the share trading or investing from anywhere.
Who is Investor and Trader?
Basically there are two types of people in share market – Investor and Trader
Who is Investor?
The person investing the money in stocks for long-term based on the fundamentals of the company is called as investor. Long term investment like 6 months to couple of years like 5 years, 10 years, 15 years and even for 20 years.
Who is Trader?
The person who trades to make quick money in share market is called as trader. Trader who does buying and selling of shares is called as share trader. The trader is not concerned about the company’s fundamentals. The trader waits for any type of news which gives an opportunity to make money in a day or in a week or in a month.
What is Trading?
The meaning of trading is buying and selling. Buying and selling of shares is called as share trading. Trading involves very high risk and hence provides high returns in small span of time.
Online Share Trading – Buying and selling of shares through internet during market hours is called as online share trading
Offline Share Trading – Buying and selling of shares through broker and placing orders through telephone is called as offline share trading. The offline share trading can be done during live market hours and also when the market is closed by placing order through telephone to broker.
Margin Trading – Margin amount is the amount given by broker for day trading. The trading done using margin amount is called as margin trading. If you use margin amount then the trades has to be closed on the same day.
Forex Trading – Trading done in currency is called as Forex trading
Day trading – Buy and selling of shares in a day is called as day trading. Day trading can also be done in futures and in options.
What is Index and Stock Exchanges?
What is Index?
Index consists of group of shares. Index denotes the direction of the entire market. Like when people say market is going up or down then that means Index is going up or down. There are two types of Indices
1) Nifty – Nifty consist of a group of 50 shares.
2) Sensex – Sensex consist of a group of 30 shares.
What is Stock exchanges?
Stock exchanges are the places where the trading of shares takes place. Mainly there are two types of stock exchanges in India.
1) NSE (National stock exchange) – Nifty is listed with NSE.
2) BSE (Bombay stock exchange) – Sensex is listed with BSE.
How Does the Stock Market Work?
First let us understand the Working of a share market
To learn about how you can earn on the stock market, one has to understand how it works.
When a person want to buy/sell shares in the share market then he has to first place the order with a broker or can do themselves using online trading systems (this will be discussed later).
When you place the buy order, the message is transferred to the exchange [either NSE {National Stock Exchange} or BSE {Bombay Stock Exchange}] and the order stays in the queue of exchange’s other orders and gets executed if the price of that share comes to that value. Once you get the confirmation of this transaction, the shares purchased, will be sent to your demat account. The shares will be stored in demat account in electronic format.
What is Demat account and why it is required ?
Demat Account – The account used to save the shares is called as demat account. The shares are saved in electronic format in demat account. Demat (short form of Dematerialization) is the process by which an investor can get shares (also called as physical certificates) converted into electronic form maintained in an account with the Depository Participant (DP).
Opening the Demat account is as simple as opening the saving bank account with any bank.
As you need bank account to save money, deposit cheques etc, likewise you need to have a demat account to buy and sell stocks in share market and to hold the shares.
Demat Account is Must
The market regulator, the Securities and Exchange Board of India (SEBI), has made it compulsory to open the demat account if you want to buy and sell shares in Indian share market.
So a demat account is a must for trading and investing in share market.
No need to have any shares to open a Demat account
A demat account can be opened with no balance of shares. And also there is no restriction to maintain any minimum shares. You can have a zero balance (shares) in your account.
Finally, After successfully opening the demat account you are ready to do buying and selling of shares in share market exchanges like BSE and NSE.
HAPPY LEARNING, HAPPY INVESTING!!
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