The securities market is at once accessible to everyone and perceivably difficult to enter into for beginners. Owing to the diverse set of securities traded in the market and the risk resulting from market volatility, it can be daunting for a first-time investor to start their foray into the market. In this article, we shall discuss how to start trading in five simple and actionable steps.
How to start trading in the Indian securities market
Over the past few decades, the shape and structure of the trading process in India's securities market has significantly evolved. Online trading has made the entire process more accessible, transparent, and cost-effective. Let's discuss how to start trading by following a structured process.
Determine your investment goals, risk appetite, and investment time horizon: The first step for your journey in online trading is to determine what your investment goals are. There is a wide array of securities available in the market with varying degrees of risk and potential return. In order to select securities for your investment portfolio, you must be clear about what types of assets you wish to invest in, how much risk you wish to undertake, and how long you wish to stay invested in a particular asset.
Open a trading account and demat account: Once you have gained clarity on your investment goals, you can proceed to the next step required for online trading, that is, opening a trading and demat account. While assessing brokerage houses to open your trading account with, you must carry out adequate research and select a stock broker with significant market credibility. You must also check the schedule of charges for said account to avoid any surprises at a later stage.
Select securities to add to your portfolio: After your trading account and demat account have been opened, you can start to place buy and sell trades in the market. Depending on your investment preferences, you can select various types of financial assets, ranging from equity shares to mutual funds, debentures to bonds, etc. It is important to assess the risk and return profile of each security before adding it to your portfolio. In order to reduce your overall risk exposure, it is prudent to invest in a diversified set of securities spread across various sectors.
Add the requisite funds to your trading account: Once you have selected the securities you wish to invest in, you can add the funds required to purchase them through your trading account. You can transfer funds to your trading account from the linked bank account, and proceed to the next step of online trading, that is, placing the buy order/s.
Place buy orders for the selected securities: As the final step of online trading, you can place buy orders for the selected securities. Once the orders have been matched and executed by the relevant stock exchange, the purchased securities shall be credited to your linked demat account (after the applicable settlement period). In addition to the market price of the securities, certain transaction charges shall also be deducted from your trading account. You can easily access your demat account at any time and monitor your portfolio. Subsequently, you can add and remove securities to and from your portfolio based on your evolving investment goals and the market scenario.
To sum it up
We have discussed five easy steps of how to start trading in India. With adequate research, time, and effort, you can invest in securities that are in line with your investment preferences. With the transparency that is characteristic of modern-day online trading, you can monitor the real time value of your investments at any given point of time, and recalibrate the portfolio as required.
