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Online Share Trading Guide for Novices

Dec 12, 2018

Umer Idrisi
In today's digital age, purchasing a share is as simple as transferring money or recharging your mobile on the go.

All you need is a laptop or a computer with an internet connection and a bank account with money. No physical presence or complex paperwork is required to trade online.

However, it is vital to find the right share and the industry that you should invest in.
Online Share Trading Guide for Novices

Whether you’ve recently started investing online or an expert online investor, you can constantly find better techniques to make the Internet work for your investment portfolio.

Here are some basic tips which you should follow to open a trading account especially if you’re new to the world of investment.

Get Sound Financial Knowledge

When it comes investing, almost 9 out of 10 traders believe that their odds of gaining good returns are above average, but nearly 95% of them lose the money they invested.

This is mainly because they don't possess the precise skills and information required to undertake investment. Thus, a sound financial understanding is the key for the success in the online share market. As a beginner, you need to learn the basics before joining the share trading world.

Information such as the P/E ratio, earnings per share(EPS), dividend, book value,  return on capital employed(ROCE), returns on equity (ROE), debt/equity ratio are some terms you should know before analysing a share.

Carefully Select Your Trading Strategy

Give a lot of thought on what type of online stock trading scheme you want to invest your time and money in.

Ask yourself if you want to go for day trading wherein you finish off each trade toward the end of every day. Or you can pursue short-term trading where you invest for a few days or months.

Despite the fact that you can simply change your plan, it's important to have a reasonable thought before you lean toward a scheme. Your strategy of trading style is especially important from a lifestyle point of view.

Day trading implies that you will be at your computer for quite a long time at any given moment, but long-term online share trading doesn't require as much care. When in doubt, just remember that the shorter the time period the more serious the trading will be.

As a general safety rule, go for a low-risk, high-reward trading strategy. Many people inflict serious damage to their trading account before they learn how to trade properly.

Though it may not seem exciting, risk management is imperative for successful online stock trading, and the only way to get a profitable reward is to manage the risk.

Be Patient With Your Money

The share market doesn't stay consistently at the top but tends to fluctuate sometimes for months or even years.

To manage your cost, utilise an online stock trading measure that takes advantage of both bear and bull markets. Fortunately, you can also take the help of the internet and books written on online trading to help understand the online investing systems that are available to investors.

The advanced technology enables you to effectively plan your investing requirements in the comfort of your home. All you need to do is be patient if the market crashes and try to figure out ways to control the damage.

Follow The Trend Of The Share You're Interested In

Before buying a share from the share market, learn how to track the shares that you want to invest in.

This way, you will be able to comprehend the right time to purchase or sell them at the most profitable time. Excellent share selection requires extensive research and advanced skills.

Unless you are remarkably experienced with ample time, it is best to seek the guidance of a professional broker.

Get Yourself A Demat Account

Now that you have ample knowledge about online share trading, it’s time for you to get a demat account.

It is similar to a bank account, but in a demat account instead of keeping the money, you keep shares in digital format. For instance, suppose you intend to buy 100 shares of XYZ company, and the market price of each share is ₹ 50, you will require an amount of ₹ 5000 in your bank account.

Once the transaction is complete, it will be highlighted as 100 shares of XYZ company credited in your demat account. Demat account is a simple and effective way to manage your shares online, and it reduces your transaction cost immensely. Also, it is better to open a trading account.

Online share trading allows you to invest in various asset classes such as mutual funds, equity shares, IPOs (Initial Public Offering), SIPs (Systematic Investment Plan) etc.

You can additionally receive up-to-date analysis and information about an investment in an investor-friendly format with SMS alert.

All in all, online share trading is a great tool for beginners to start their investing journey as it is less time-consuming and easy to grasp.

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