If you’re thinking about trading, or have decided trading of bat coin reddit is something you would like to do, your next logical step is to learn the ropes. Unfortunately it’s not easy. There are many terms that traders use that you might not understand in the first instance, and other things like broker commissions can put a damper on your enthusiasm (and bank account) right off the bat. As with most things though there are also some pretty effective ways of getting around these obstacles and start trading as soon as possible.
1. Why trade?
The first and most important thing to do when starting out is to determine what your goals are. Do you want to make money, or do you just want a quick buck? While making money by trading is certainly possible, it’s also a rather rare event. In fact if you try it for long enough you will discover that more often than not it’s not possible at all, let alone probable. Thus the main reason for trading has to be something else.
When I started out with my own account I set myself a goal of learning how the stock market works, figuring out the mechanics behind how different types of stocks move up and down in price and how exactly it all happens.
2. Where to start
If you want to learn the ropes of trading but aren’t sure where to start, consider opening a Demat Account and a Trading Account. A demat account will allow you to buy stocks online as well as store all your stocks in one place. Opening a Trading Account will allow you to trade online and use it on any public computer without needing access to your private login details. Another option is an account with any of the online brokerages like Zerodha or Tradejini (both are immensely popular among Indian Traders), but these have far more stringent requirements and if you’re just starting out I would recommend getting hold of an NSE Desktop Client first.
3. One of these accounts
A Demat Account comes with its own password, and each trading account is registered to an email address. Never give your password to anyone other than your own trading broker and do not give any personal information like social security numbers or bank account details over the phone or via email. You can view all your open trades from the broker’s website. Demat Accounts are not free although most banks will deposit some amount of free demated funds into a bank account for you, which will then be credited to your brokerage when you transfer money.
4. How much to start with
There is no such thing as a rule of thumb to tell you how much money you should start trading with. Before deciding on how much to invest, decide your investment goal and timeframe. The amount of work will also depend on the amount of money. If you are thinking about buying 10 stocks, why not buy one instead? It will be a tiny fraction of your portfolio and hence it’s better to have only 1 or 2 positions than 10 if you have limited funds for trading.
5. Don’t get too greedy
The stock market is full of stories about people who have made millions by investing in this or that stock. Don’t do that. The stock market is a slightly skewed game and most people who play it lose money in the end. If you are lucky, your investment could succeed but don’t bet on it.
6. Read up
The internet is a treasure trove of information on trading and the stock market, and with a little effort you can find out a lot. Once you are through the first three or four months of trading you should have a pretty good idea about how things work and most of the popular stocks will start to make sense to you. Then it’s time to learn what different brokers offer and start investing your hard earned money wisely. For more on this subject and other related topics refer to these 5 books in my article: Top 5 Books For Trading Success.
7. Start trading when you can
It’s best to start trading with a small amount, i.e. a relatively small investment so that if things get difficult you have money available to bail out (or buy more stocks). The key thing is not to be greedy and to have a plan before you invest any money. Do this and you shouldn’t lose much of your money trying out whatever strategy that suits your personality or biases, or just the whim of the market at the moment.
8. Always remember that things can go wrong
Trading is a risky activity, and even if you think you know the stock market inside out like a true-blue trader, things can still go wrong. The best you can do is invest sensibly and stay rational about your decision making in the stock market. Remember that nothing is for certain in the stock market – it’s only human nature to believe in more certainty than actually exists.
Summary:
If you have made a profit, treat it as its own separate entity instead of using that money to invest more in the same stock. If you have lost money, don’t keep putting more into the same losing position – cut your losses and move on.
Also remember that there is no such thing as a sure-fire way to making money with stocks or any other type of investment market.
