By Swati Mishra
Selling and buying stock take place in the stock market. The Stock Market is known for the place where all the reputed companies are traded. People can buy and sell their sharer share in this market. A stock or share is a kind of financial instrument that represents someone’s ownership or share in the company, corporation and firm. It basically defines the difference between assets and earnings (profit).
Participators of the company hold the specific share of the company and as per their convenience shareholder can sell their equity or share in the stock market to increase the market value of the share for the purpose of becoming richer.
So, if you think to invest in the stock market then first you need to understand the basic ethos of the buying and selling process. Most people get scared to invest in the market because it relies on market behaviour and fluctuation in demand and supply decides the value of the share in the stock market.
Yes, there some horrible stories of loss of their portfolio value. But this story is written by those who could not their investment in a disciplined manner. The reality is that investing in the stock exchange market is a combination of risk and fear. It is all about the business strategy. When you take your fear as a risk in the most efficient way, no fear would turn into a horror story. After all, discipline matters the most, and making a wise decision is like a carpet by which you can walk long. Before investing in the stock market, you have to know the types of stock.
Types of stock
There are two types of stock common and preferred. The term equity is synonymous with common share, as their combined market value and trading value are many magnitudes larger than that of proffered shares.
The common share has voting right while the preferred share generally does not have voting right. Preferred share is called preferred because investors have a preference over common share in a company to receive dividend well assets in the event of a liquidation.
Why you should invest in the stock market-?
As companies sell their equities and shares in the stock market in the hope of becoming rich and expanding their business. It is a source of raising capital. They either sell their share or buy someones. They buy a stock when its value goes down and they sell their stock when its value goes high, this is the strategy to make a profit in the stock market, to fill their liquidity.
The stock market is the most preferred route for the many startups that need capital. The entrepreneur initially starts raising A fund from persona saving as well as friend and family to get the business off the ground. As the business expands the capital requirement becomes more substantial and an entrepreneur needs to invest in the stock market.
A crucial step to buying stock
There is the primary market, where the fresh stock offers directly to the public in an initial public offering to raise capital and the stock market which is also known as the secondary market is a place where the share which has been sold in the primary market, shares is traded. In this market, one investor buys the share from another investor at the current market price or whatever the price at which they can assert. This market is highly safe as it is regulated by Stock and Exchange Board of India (SEBI).
Buying stock you need a broker. A broker is one who registered himself in the stock market to manage the collaboration between investors. A broker is someone who performs all the legal activity on the behalf of you according to your instructions.
Procedures require to invest in the stock market-
- The first and for the most required thing is a PAN card or ADHAR card to identify your originality. It is mandatory to invest in India. It is an initial step for the KYC procedure while opening an account with the stock market regulator SEBI. Besides this, the government has directed the regulator to ask investors about their six months bank statement along with cancelled cheque as per the new rule to open Demat account.
- Get broker – Common people are not allowed to enter directly in the stock market for executing the trade. For entering in the stock market for the purpose of investing or buying, you need to contact a broker. A broker is someone who runs the buying selling stock market with authenticity. All the buying and selling of equity have been done through broker ha will charge a brokerage or brokerage fee for the assistance they provide.
- Get a Demat account – After getting broker, the next step is to open a Demat account. Demat account is used for trade. This account will hold the equity or share, that you have bought, with your name. shares most in the firm offer of dematerializing or Demat account.
- Buying and selling – after completing all the above mentions procedures, one needs to intimate the broker about the quantity to be bought or sold with the price at which you wish to implicate the transactions.
There are some ways that make your investment worthy enough –
- Understand your purpose of investment, are you willing to expand your business or you want to make money, decide accordingly.
- Try to focus only on those stocks where your business or interest aligns. There are several stocks available in the market, which one is good for your investment is up to your way of taking a decision, so make market strategy accordingly.
- At which time you enter, that is the most important; entry at the right time is like a dose of abundance. Try and buy the share at its lowest cost especially when the market is weak because this turns into high valued share later. Though, the share market is all about demand and supply of the market.
- Always look after the broker, always cross-check him that whatever he is doing, is happening according to your consent.
- Maintaining a portfolio regularly is important. Always keep an eye on the trending market, do not depend on a single piece of cake.
Therefore, the stock market is run on the market strategies and a person having greed for becoming rich can choose the stock market as a source that is not only reliable but also regulated by the reputed authority.