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A Guide to Share Market Investment

Submitted by admin on April 5th, 2024

An investment strategy is not market-independent. Hence, if you want to invest in the stock market, you should have a basic understanding of it. There are 3 proven ways of making the most of investment in the stock market.

Intraday Trading

Choose intraday trading if you want to –

• Invest nearly Rs. 10,000 (Remember, no one is risk-immune and can lose his/her entire investment in intraday trading)
• Allocate 10 hours/week to understand the basics of day trading.
• Learn trading strategies (day charts and candlestick partners)

As a beginner, you can make Rs 30, 000 daily on your investment of Rs 10, 000. However, you should stay focused on capital preservation and trading with stop loss.

Your earnings will increase over time as you learn more about trading.

 Option Trading

This is a highly misunderstood aspect of stock market investment in India. If understood properly, you can make a huge profit on your investment in the stock market. Two types of people earn huge success in stock options trading – Option Buyers and Option Sellers.

Option Buyers: They start with less capital. However, they have sharp minds and can make quick decisions. They rely on logic, are more disciplined, and are devoid of emotions. They devote more time to picking up tips and tricks of actual trading.

Option Sellers: They invest a hefty amount but devote less time to day trading. They have great patience to hold trade positions longer, which explains their huge success.

If you want to explore Option Trading, start learning Strangle and Straddle strategies that Option Sellers employ.

Value Investment

Value investment means purchasing great businesses at reduced prices and making them a significant part of your investment portfolio for a lifetime.

Warren Buffet popularised this concept of investment in the stock market.

One big plus of this option is it does not require investors to keep a watchful tab on daily stock movement. You need to spend a great deal of time evaluating, reading, and researching annual reports to find undervalued stocks (less than true or perceived value).

Make an investment immediately after finding a stock that is doing fine despite being beaten up.

Why Stock Investment is Better Than Other Types of Investment

There are multiple reasons in favor of stock market investment. Here are those:

1. It churns out higher returns on investment in the long run.
2. Compared to other assets such as real estate, stock investment is more liquid, enabling investors to convert their investment into cash quickly.
3. You can invest in the stock market with an amount as petty as Rs 500.

How Share Market Functions

Share market functions on the basic demand-supply principles. Stock price goes up concerning high demand because potential investors are willing to buy good company stocks. The price falls in response to negative news or rumors about the company.

Factors Affecting Demand-Supply of Stocks

1. Sector performance
2. Company earnings
3. Expected interest rate
4. Government regulations
5. Country’s economic landscape
6. Global financial scenario

Share Market Investment: Remember 5 Points

1. Your investment goals
2. Risk hunger
3. Diversification
4. Research
5. Patience

Finally, always work with a trustworthy stock market broker before finalizing your investment decision.