The stock market is no longer just for seasoned investors these days as many youngsters are also trying their hand at the art of trading, thanks to smartphones through which they can easily trade stocks using an app.
Amid growing financial literacy and social media awareness, a new generation of young people are looking to grow their money or learn the art of investing early in their careers.
The number of active Demat accounts in India has more than doubled from around 4.1 crore in March 2020 to 8.97 crore in March 2022.
However, everything seems simple at first, but it becomes difficult for new investors to understand the finer details of the stock market and trading as things get serious and real money is involved.
Although people go public to grow their money, there are always risks due to the complex nature of the market. It is therefore imperative to learn and understand how the market works, otherwise you will end up losing your money.
What do you need to start trading?
For trading, you will need a trading account and a Demat account. A Demat account allows you to store the stocks you have purchased, while a trading account will facilitate the actual buying and selling activities. You can open an account in any licensed bank or broker by submitting documents such as PAN, AADHAR, photographs, etc.
Once verified, the Demat account is opened and you can start investing in the stock market.
What is a trading account?
A trading account is used to buy and sell securities that you want to trade on the stock exchange. The Bombay Stock Exchange and the National Stock Exchange are the main stock exchanges where shares are listed. However, some stocks may only be available on either of these two exchanges.
Linked bank account
It is also essential to link your bank account to your trading account for a smooth flow of money in and out of your account for trading. You can find two-in-one accounts that serve as both a Demat account and a trading account.
How to start investing
You can invest in the primary equity market or in the secondary equity market depending on your choice.
In a primary market, investment is made after a company has launched an initial public offering (IPO). It totally depends on whether the shares are allocated to an investor in this case, as it depends on the availability of the shares.
An amount is blocked in your bank account once you request a lot on an IPO. Once your shares have been allocated, the amount is then debited from your account and you can start trading them within a week.
The secondary stock market is where the action of buying and selling stocks occurs between investors. You can select the stocks of your choice to buy or sell. You can set the price at which you want to buy or sell a particular stock.
Are there any risks?
It is important to understand how the market works before you start investing in the stock market. You can refer to features such as educational tools and research that some brokers offer through their apps or on their websites. This way, you can minimize risk and make a better choice on which stocks to buy, and when to buy or sell them, because timing is key in the markets.