In beginners mind there are many questions related to stock market. What is stock market? How stock market works? What is required to start stock trading / investing in stock market? Can we make money in stock market? How difficult is it? Can I do full time trading? How can I do part-time trading? etc. In the blog series, I will try to answer many of these questions. Let us look at What is required to start stock trading / investing in stock market?
Stock trading / investing in Stock market
Stock Trading and investing can be used to generate regular income as well as build long term wealth for ones future. But anyone who wants to start exploring this area and is thinking of doing it on a part time or full time basis must understand that it comes with great risk of losing ones capital if sufficient skill and knowledge is not developed in this area.
Based on my learnings of many years in stock market, following are various knowledge and skill elements one must study and develop to gain success in trading and investing.
- Basics on stock market – How stock markets work? Why stock price move up or down? Who are the players in stock market? Different types of instruments available in stock market etc.
- Fundamental analysis – What are some of the basic fundamental parameters one must study to find out the reliable companies for medium to long term investment,
- Technical analysis – What is technical analysis? Different types of charts, study of candlestick charts, Dow’s theory of trend analysis, candlestick/chart patterns, support and resistance, trendlines, various technical indicators, multi timeframe analysis etc.
- Types of trading / investment – Intraday, Swing, positional, medium term, long term investment etc
- Risk management, position sizing, portfolio approach for investing
- Trade execution using various features of trading tools, types of orders, short selling, concept of stop loss
- Trading Strategies for trade entry, exit, stop loss
- Advanced derivatives products – Futures, Options, weekly / monthly expiry
- Trading / investing mindset, how to hold trades, positions, how to avoid greed and fear, fomo, how to cut your losing trades as per rules, following set process, realistic return expectations, long term commitment
Based on my experience, it takes about two years to develop all these skills and to start effectively utilizing them for generating profits. Even after two years, the results can vary depending on the level of skills developed and practiced in the market. In this blog, I will try to cover each of these in detail for your understanding.
In this post we explored about What is required to start stock trading / investing in stock market?. We will discuss about other topics in subsequent posts.
Following post will start discussing the first point.
Stock market for beginners | Beginners guide to stock market