Everyone who invests, regardless of experience level, hopes to significantly increase their returns on the share market. You need a solid approach that not only protects your money but also yields sizeable profits in order to accomplish this aim. A thorough grasp of market dynamics and the elements that influence profitability is essential for success in the stock market.
Understanding the Basics of the Share Market
Before we get into the complexities of making one lakh consistently from the stock market, how about we go over the essentials. Let us, most importantly, characterize the securities exchange. The financial exchange, or offer market, is a web-based commercial center where buyers might buy offers or stocks in openly recorded partnerships. Terms like “stocks,” “value,” and “money” all suggest exactly the same thing in the domain of stock trading. Stocks signify ownership in a certain firm, and their prices change on a daily basis, often ranging between Rs 10 and Rs 500.
The Mechanics of Buying Shares in Share Market
At the point when you purchase stock in an organization, you really become a section proprietor of that firm. In the event that the firm develops and becomes beneficial, the offer cost rises, permitting you to benefit from your venture. Here are a few pivotal things to recollect:
You can begin with one share and progressively grow your ownership dependent on your financial situation.
To buy and hold shares, you’ll need a demat account.
Selling shares at a higher price than your purchase price results in a profit.
Conversely, if the company faces financial challenges or is involved in unethical activities, share prices may decline, leading to potential losses on your investment.
Demat Account: Your Gateway to Stock Trading in Share Market
When you engage in stock trading, you’ll need a demat account to hold your securities. Demat stands for “dematerialized account,” which means your shares exist in electronic form. Dematerialization involves converting physical share certificates into digital records, eliminating the need for cumbersome paperwork. This electronic format offers convenience, accessibility, and ease of tracking your investments from anywhere.
You can open a demat account with any bank or stockbroking firm, but keep in mind that your regular savings or bank account cannot be used for share trading.
Different Types of Stock Trading
The share market offers various trading strategies to suit different risk appetites and investment horizons. Here’s a look at some common types of stock trading:
Intraday trading involves buying and selling stocks within the same trading day. Investments made in intraday trading are not meant to be long-term holdings, and there’s no blockage of funds. Profit or loss depends on the price movement during the trading day. Key points to consider:
Intraday trading can yield profits ranging from Rs 100 to Rs 10,000 or even Rs 20,000 in a day, depending on your risk tolerance.
Similar types of losses can also occur.
If you face losses and have available funds, you can convert your trading positions to delivery mode.
On the flip side, delivery trading means buying shares with the plan to hold onto them for a long time. When you buy these shares, they get placed into your demat account automatically, and you can keep them as investments for the long run.
Here are some important aspects:
You can hold shares for the long term, potentially realizing returns ranging from 2 times to 40 times the principal amount over a period of 2 years.
This approach is considered safer and suitable for average trend reversion.
However, it’s essential to be prepared for the possibility of up to 90% loss if the investment goes south.
Swing trading focuses on making profits over several days or weeks. In this strategy, you purchase stocks at a particular price and wait for their prices to increase over a defined time frame before selling. Key considerations include:
Benefits can go from 10% to 100 percent relying upon the stock’s presentation.
Misfortunes can happen assuming the stock cost drops after your buy, going from 30% to 70%.
Options and Futures Trading
Options trading gives you the right, but not the responsibility, to trade shares at a predetermined price until the contract expires. Futures contracts, on the other hand, compel you to purchase or sell shares at a future date.
To summarise, earning a monthly income of one lakh rupees from the stock market is possible with the correct plan, risk management, and market understanding.
Remember that stock trading involves inherent risks, and it’s crucial to invest wisely and diversify your portfolio to mitigate potential losses. With dedication and a deep understanding of your chosen trading strategy, you can work towards realizing your financial goals in the share market.
Disclaimer: The information in this “Stock Profile” blog post is for informational purposes only. It is not financial advice. Always consult a qualified expert before making investment decisions.