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How to Trade in Equity Market

How to Trade in Equity Market

It is difficult to overestimate the importance of discipline when it comes to stock trading. You first need discipline with respect to your cost of trading. You can only be profitable if you can keep costs at the bare minimum. Secondly, ensure that trades are timed properly.

If you are careless about trade levels, then profits can get eaten away. You also need discipline in terms of order execution and deciding on the type of order to use. Lastly, there is discipline in monitoring your positions in terms of the stop loss levels, the profit booking levels, risk management etc.

How to trade in equity markets

  • The first step to equity trading is opening your trading account with a broker. This trading account will be opened along with a demat account. You need to go through the basic KYC formalities while opening trading account. It is now possible to open a trading completely online by using the online e-KYC facility offered by using your Aadhar card.
  • Once the trading account is opened and activated, the next step is identifying the universe of stocks that you want to trade in. It is always advisable to keep a small set of stocks that you can really focus on and evaluate from all perspectives. Once this is done, the next step is to evaluate the technical ranges and the news flows for all these stocks.
  • Once the trade is identified, the next challenge is to actually execute the trade. There are some precautions to keep in mind here. Firstly, always put a stop loss while trading in the stock markets. This can be either a technical level or an affordability index, but it should be there. Then also set a profit target at which point you will book out of the trade.
  • When you place the order, the type of order that you place is very important. You can either place a market order which just gets executed at the best possible price. Alternatively, you can also place a limit order where the order only gets executed if the price is your defined price or better. That means lower in case of by and higher in case of sell.
  • Finally, keep a tab on your trade. Check the trade book and ensure that the trade is executed at the price that you wanted. Also keep monitoring your position in case any remedial action is required. In volatile markets try to execute the order in phases rather than in one go. Finally, ensure that the trade smoothly transits between demat, trading and bank account.

You can trade offline, online or using back up methods

There are different ways of actually executing trades. Essentially, your trade can be executed in three different ways.

  • The online trade is the most common method among most investors these days. Here the trade is entirely executed through the internet by logging on to the broker website. Nowadays, brokers also offer the app facility which can be downloaded on to your smart phone or notepad and you can execute trades even when you are on the fly. Online trading is quicker, seamless and is a lot more efficient compared to other forms of trading.
  • Then there is offline trading which is about either walking into your nearest broker office or calling up your dealer and executing the trades. Here you get offline contract notes and you need to be careful that instructions to the dealer are properly given and also ensured that they are properly executed.
  • Finally, when systems go down there is a back-up trading facility that is called call-n-trade where you can call up the back office, authenticate yourself and put the trade.
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"Prevent Unauthorized transactions in your Trading/Demat Account --> Update your mobile numbers/email IDs with your stock brokers/Depository Participant. Receive alerts/information of your transaction/all debit and other important transactions in your Trading/ Demat Account directly from Exchange/CDSL at the end of the day .......... Issued in the interest of investors." | "KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary." | "No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorize your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account." |"Investment in Securities Market/Commodity Market is subject to Market Risk. | RGESS investors kindly download New Retail Investor Certificate from link - https://www.cdslindia.com/investors/rgessverification.aspx | Dear Investor kindly update Aadhar Number with your demat account, contact your nearest branch."
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