Knowledge is power and something that traders keep working on to survive in the stock market with minimum losses. Keep up on the stock market’s latest news and events that hugely affect the share price. Legends have equipped the market with numerous trading secrets and valuable techniques to know about. Here are the basic trading rules that every trader needs to follow rigorously. Let us start the post with demat and trading accounts that are no more secrets, still important to look at for new entrants.
Trading Account: A trading account is an online account with a stockbroker that records all the trading transactions you make to buy or sell securities in the stock market. You need to log in to your trading account to connect with the stock exchange and place a trade order in the stock market.
Demat Account: A demat account is another online account with a stockbroker that holds all the financial securities as a safe online repository. You can keep every security you trade in the stock market in your demat account.
How to create demat account and trading account online:
You can create an instant Demat account and your trading account with a broker registered with the SEBI and stock exchanges.
How to Trade Stocks – Trading Secrets and Basic Rules
Stock traders play strategically to buy, sell, and close their positions within a short span. Their trading route is based on the following rules:
- Set a stock trading budget
The stock market is risky. You need to define your budget for trades to manage the risk involved. It is necessary that you take a position with decided funds that you can afford to lose. Experts suggest using only 10% of the total allocated budget for a trade.
- Know about market orders and limit orders
When you open a trading account, your stockbroker provides you with a trading platform to place trades using different order types. Generally, traders should be aware of two order types –
- Market order: when your stocks are bought/sold at the best available price, and the execution is guaranteed.
- Limit order: when your stocks are bought or sold at a better price than the set price, but the order execution is not guaranteed.
- Practice with a virtual trading account
Like hands-on training, a beginner in the stock market has an opportunity to practice before employing real money in the market. You can use virtual trading tools or paper trading facilities offered by stockbrokers. Test your trading knowledge before starting trading with real money.
- Create your positions with small amounts
A stock trader needs to save his/her employed capital as much as possible with minimized losses. It helps traders to survive long in the stock market. Employ small amounts instead of putting all your funds in a single trade in one go.
- Choose your broker wisely.
Create an instant Demat account and trading account with a registered broker leveraging the latest technology. However, it depends on your trading style. For example, intraday traders are more sensitive to time and prefer an advanced trading platform with fast order execution to capitalize on short-term market fluctuations.
- Stop-loss can prevent huge losses.
A stop-loss limits the loss if the price of the stock takes the opposite route than your analysis. It is important, especially for day traders, if you trade on a margin.
These basic rules will help you to be prepared well for stock trading before diving into the stock market.
Huge information is out there. Time is the best mate for market participants to learn about stock trading. Keep learning. With a view to the current economic environment, pharma, infra, chemical, agrochemicals stocks are turning the corner towards more positivity, and traders continue to watch these stocks.
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