How to buy a stock in Stock Market? Step-By-Step Explanation.
How to buy a stock in stock market? Now a day, buying a stock is as simple as recharging your mobile or transferring money. All you need is a computer with internet connection, a bank account and some money in that account, obviously.
If you have seen movie Guru (in which Abhishek Bachchan was in leading role based on the life of Dhirubhai Ambani), the scenario of the stock market might scare you. But it was something like 50-60 years back. Now, no physical appearance, no much paper works are required. You can buy a stock sitting in your room in front of your laptop and that too within 2 minutes. How? That’s what I am going to teach you now. How to buy a stock in stock market? Just be with me for the next 5-10 minutes.
Buying shares online is the easy task, but I believe first you need to find that right stock that you should buy. There are few basic works which you should go through to find the best stock for you:
Read and Research:
There are tons of websites on the internet where you can get tutorials for stock market basics and about how to buy a stock in Stock Market? For beginners, I will recommend following websites of moneycontrol, economic times and Investopedia – Sharper Insight. Smarter Investing, Learn how to follow Stock Market and trends- Trade Brains
There are few books which are must-read for the beginners in the stock market. They are:
- The Intelligent Investor
- One Up on the wall street
- Beating the street
- Common Stocks and uncommon profits
You can read further about Indian stock market from the following useful links:
- Investment Basics,
- Sensex, Nifty & Index,
- How to create your Stock Portfolio?,
- Learn how to follow Stock Market and trends- Trade Brains,
- Six Different Types of Stock in Indian Market according to Peter Lynch
Now after learning the basics, the main tasks begins. You need to learn how to follow the stock market, their trends, their fluctuations etc.
Get good financial knowledge:
A good financial knowledge is a key for the success in the stock market. You need to understand the fundamentals before entering the stock world. The basics of Earnings per share(EPS), P/E Ratio, Book Value, P/BV, Dividend, Return on Equity(ROE), Return on capital employed(ROCE), debt/equity ratio etc should be known to you before you analyze a stock. You can read further about from these links: Investment Basics, Six Different Types of Stock in Indian Market according to Peter Lynch
Make your dummy portfolio:
A portfolio is nothing but your collection of stocks from different or same sectors. A portfolio shows how many shares you are owning from which sector. Generally, a good portfolio maximizes the profit and minimizes the risk. You can learn how to create your portfolio from this link: How to create your Stock Portfolio?
Follow the stock you’re interested in for few days:
The last step before buying a stock from the stock market is to learn how to follow stocks in the stock market. You should know how to track stocks so that you can buy/sell them at the best time. I advise the beginners to at least follow the stocks for 1 month before buying them. You can learn how to follow a stock from this link: Learn how to follow Stock Market and trends- Trade Brains.
Want to learn more? Here is a best selling book on stock market which I will highly recommend to read: Beating the street by Peter Lynch
Now that you know all the basics for the stock market, you can move further on How to buy a stock in Stock Market?
How to buy a stock in Stock Market?
The basics requirements for buying a stock in the stock market are:
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- Stockbroker: General people can’t go to a stock exchange and buy/sell stocks. Only members of the stock exchange can buy and sell and they are called the brokers. Every broker should be registered on the Securities and exchange board of India(SEBI). There are a number of brokers/ sub-brokers which you can choose for trading. Some online brokers are Sharekhan, Kotak Securities, ICICI Direct, 5paise and India Bulls.
- Saving Account: Obviously you need a saving account for trading in the stock market.
- Demat A/C: It’s very simple to open a demat account. Now a day, the banks even offer you to open a 3-in-1 account, i.e. all three Saving+ Demat+ Trading account, by filling few forms just once. The 3-in-1 account will save your timing a lot and I recommend you to open a 3-in-1 account if you want to start trading in the stocks. You can open it in banks like ICICI, SBI, Kotak etc.
You can decide your online broker for opening demat account depending on the different factors like brokerage charges, facilities offered, annual maintenance charges etc. Here is a link which you may find useful:
- Laptop and Internet connection: Obviously, the soul of modern era which is a must for all the online facilities.
The documents required to open a 3-in-1 account are PAN card, Aadhar Card (for address proof) and an ID proof (generally Aadhar/Pan card can also be used as ID card). Once you opened your demat account, you will receive your username and password, and then you can start trading using your account
I hope this post about ‘how to buy a stock in Stock Market’ is useful for the readers. Feel free to comment below or message me if you have any doubts or if you need any further help.
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Hi, I am Kritesh (Tweet me here), an NSE Certified Equity Fundamental Analyst and an electrical engineer (NIT Warangal) by qualification. I have a passion for stocks and have spent my last 4+ years learning, investing and educating people about stock market investing. And so, I am delighted to share my learnings with you. #HappyInvesting