People love money. Not just in India, but around the globe too. The urge and desire to have more and earn more has now become a characteristic trait of humans. We are fueled by the passion, to have access to better facilities, and transform to a better lifestyle, as well as, the standard of living. It is a fact that, where people are so hard after money, inflation, as well as the depreciation of the currency, is decelerating people from achieving financial freedom through their employment or business. Due to this and other consequential problems with their future goals, one searches for the options to grow money and often lands upon the doors of the stock market or any share market learning course.
Stock markets are a place of exchange where shares, contracts such as derivatives of shares, commodities currencies, and bonds- both corporate and government are traded by traders and investors of different financial status with the help of brokers. Mutual funds manage your invested amount in these assets with an experienced fund manager and charge you for the same. Companies are listed in a stock market through an exchange with brokers transacting the equity or the ownership rights of the company, commonly called shares or stocks at the request of their investor and trader clients through their Demat and trading accounts. Stock markets are regulated by SEBI, and every participant has to follow SEBI’s rules, to protect the investor’s and trader’s money.
To understand how markets work, we have to first understand primary and secondary markets:
- Primary market: Here, companies and corporates can raise resources through financial borrowing in exchange for rights to the same company. They are offered this opportunity to raise amounts in place of carrying out certain duties and following obligations.
One extremely popular offering in the Primary market is the IPO. It is the offer in which an unlisted company provides its equity in return of capital, first time to the public. People bid and buy at the price issued and if it gets listed at a higher price than the issue, it’s profit for the people who are allotted the equity. Another offering in primary markets which are not so popular as IPO’s is NFO’s. They are essentially the IPO of Mutual Funds.
- Secondary market: Those stocks, shares, bonds, or debentures that have already been listed or completed their listing process can be freely transacted with buy and sell requests from their Demat or trading account with a broker.
Mechanism or Flow of money:
The client adds funds into their trading account with the broker. Then the client places a request to buy or sell a certain stock or a share. The request is entertained by the broker, checking the availability of funds, and then transacts with the exchange. The product is bought and transferred to the client’s trading account for the day where it will reach the Demat account if the clients want to hold it after buying/selling. Now as per the study of the client, they choose to square off or close their trade and they place the same request to the broker and the transaction is termed complete. If the duration of closing is as following; respective are the names for the trades.
Investors buy and hold the stock for years because as the companies grow, the amount they had invested into the company in exchange for rights also grows. Furthermore, the companies issue bonuses, extra shares to the stakeholders as a favor to stay invested, when companies make extra profit.
Within a day- Intraday
Buy and Hold for around 10 days- Swing
Buy and hold for more than 10 days- Positional
In short, how the price moves- Demand and Supply with sentiments of the market.
The Aim to be profitable:
Always buy low and sell high. Even if you buy high, sell even higher. That’s the motto to be profitable in the stock markets. But wait how these highs and lows are decided?
An investor’s approach- Fundamental Analysis
By now you know, that an investor holds stocks for years and sells when it grows manifolds during these years. But did this question arrive into your mind that how did they chose which company to buy and hold in the first place, as there are so many companies in the market?
The answer is Fundamental Analysis. It is the art of choosing a stock that is underpriced in the present times in comparison to what it could be in the coming few years. The tools of this art are- Ratios, Profit and Loss statements, Balance Sheets, Cash flow statements, and the profits and risks associated with the business. This analysis can be extremely vast and if a person has no guidelines in it, he/she may take months to come to a conclusion which can be done in a few minutes. We at GSF aim to make this process easiest and least time-taking and thus have a custom-coded tool in our fundamental analysis of Indian stocks.
A Trader’s approach- Technical Analysis
Depending upon the duration of the holding period, the traders are defined. They capitalize on small movements during the day, couple of days or month and make a profit on that, as the market moves in a zigzag pattern. It never goes up and up and never goes down and down. Such zigzag movement is capitalized in trading to make profits. There are many approaches to it and almost every single approach is equally profitable, but the distinguishing point is the mindset. This mindset takes time and effort to build and our goal is to make this through simplistic strategies, setups, and decades-long-tested systems.
What you should do?
You would have often seen people from various backgrounds and unfortunately sometimes from stock market training institutes that you need to choose one. But trust us, with a simple plan you can do both by putting effort and giving time. Stock market when learned as a skill reaps humungous rewards to the one with the right knowledge and mindset. We at Goela School of Finance offer complete stock market courses for beginners so that you get complete knowledge of fundamental analysis of Indian stocks and get the simplest and easiest trading strategies to be profitable in the long term. If you have the passion to achieve your financial freedom steadily through a systematic plan and are willing to learn a new skill your first step starts from here: