What are the guidelines to trade stocks in India?
The first organized stock exchange established in 1875, stock trading in India has become an importantpart of the economy with the National Stock Exchange making a daily turnover of close to 3 lakh crore rupees.
Despite the truth that companies use stock exchange to mobilize public money for funding their projects, investors view the stock exchange as a place to invest money and earn a good return on their investments.
It, consequently, becomes vital for investors to examine and methodically research the stocks before deciding to invest or not.
Here are few important guidelines to be kept in mind before investing, while holding investment and when making a decision to withdraw the investment.
1. Choose a reliable share broker: In order to trade in the Indian stock market, it is mandatory to have a trading account.
There are a lot of brokerage companies that open trading accounts and propose brokerage services in return for brokerage commission.
Brokerage costs can cut profits earned and therefore, an investor should always examine the commission rates on offer and make sure that there are no hidden charges involved with lowest brokerage costs.
2. Analysis is a mandatory: There are a lot of stock guidelines that are circulated depending on speculation and baseless forecast.
It is essential for an investor not to get carried away by these mumbles and accept a trading tip only after systematic research and reading of the stock.
3. Patience is the chief input: The stock market is not for those who look forward to their returns to grow overnight.
An investor must look for stocks which propose constancy and good growth forecast and holds the stock till it develops.
To fear is not an option in the stock market; patience is the chief input to earning returns on investment.
4. Be acquainted with your risk enthusiasm and to place stop loss: Limiting your losses is as important as looking for gains.
Setting a stop loss restricts losses in case of stock prices collide, saving the investor from unparalleled losses.
5. Diversification of portfolio: An investor must maintain a balance between high beta and low beta stocks and have a mix of stocks from diverse industries and diverse size of companies so that taken as a whole investment can be hedged to minimize potential losses.
Investing in the stock market could be unsafe but proper research and calculated risk-taking can make investors get good returns on their investments.