After reading this blog you will be ready to make money from share market. Before start, remember one thing that reading is very important in share market. All the big investors in share market read at least 6 hours a day.
“The stock market is a device for transferring money from the impatient to patient.”
— Warren Buffett
I know you guys have lots of doubt and I am going to give you the understanding on each and every topic so lets get started.
There are numerous people who want to earn money from share market but they have lack of understanding about the share market.
We can consider the share market as an auction house where securities are on auction. There are two most important entities buyers and sellers who drive the markets. There are many share markets around the glob which offer chance to buy and sell shares. Now lets get familiar with some common terms which will help us understand the whole game.
Shares: Share is a unit of ownership in the respective company. Generally ownership is measured in percent of shares. Lets say if you have 10% percent of share in the company it mean you own the 10% part of the company. Share are traded in the stock markets like New York stock exchange, Bombay stock exchange and so many around the world.
Stock market index: An stock market index or share market index is a collection of companies share. A National stock market index show the health of stock market of a particular nation. There are various index in India stock market like Sensex, Nifty 50, Nifty next 50, Nifty Bank and many more.
Buyers: Buyers are the group of people who want to buy the share because they think the price of share is going to go up after buying.
Sellers: Sellers are the group of people who want to sell the share because they think the share price is going to go down after selling.
Bulls and Bears: Generally buyers are bulls because they are bullish on the share. It means they think that price will go up. Sellers are the bears because they think price will go down and want to sell.
Trading: Trading of share happens in various ways. Short term trades buy or sell share for short duration. These traders does not hold the share more than a month. If you buy shares only for one day then its call Intraday trading. Intraday trading is highly risky because it is very hard to understand the stock move. Long term traders or better we call them investors, keeps the share for long time in their portfolio. Long term can be life time or until company exist.
When there are more buyers in the share market, share market goes up because everyone want to buy and there is shortage of shares which leads to higher price of shares. Same way when everyone want to sell share price come down.
Now you would be thinking that How can i buy shares? To buy shares you need a demat account which you can get it open from any bank. Once your demat account is opened then you will be able to buy shares online and track your portfolio. I personally prefer Zerodha account because they have very less brokerage charges and it’s kite app is fabulous. If you want to open you an account they you can click here or you can try free Edelweiss account.
Now I think you have clear idea about how share market works but it is not enough. There are various things which impact the shares prices like Sentiments, Global cues, Oil prices etc. I will write a separate blog for all these. For the time you go and find you favorite company to invest money on https://www.moneycontrol.com .
There are various other books also to learn the investment.