What is the stock market?
A stock market is a place where buyers and sellers interact to trade in publicly listed companies with the help of a stock exchange.
What is a stock exchange?
The Stock Exchange is a market where you can buy and sell stocks, mutual funds, bonds, and commodities. Every country has different exchanges.
Types of exchanges in India
1. NSE (National Stock Exchange)
2. BSE (Bombay Stock Exchange)
NSE
The NSE is a government-based exchange founded in 1992. The NSE is a leading stock exchange in India, located in Mumbai, Maharastra, India. The NSE was the first electronic exchange in India. The NSE has listed more than 2000+ companies. The NSE is under the ownership of the Ministry of Finance.
BSE
is a government-sponsored exchange is the oldest exchange in India, founded in 1875. BSE is the 7th largest exchange in the world and is located in Dalal Street, Mumbai, India. The BSE has a market capitalization of 2.8 trillion. The BSE has listed more than 5000+ companies.
Categories to classify stocks
1. Income Stocks
2. Growth Stocks
3. Protective Stocks
4. Speculative Stocks
Income stocks
The stock which has had stable earnings over the past 10 years and the stock which has been giving dividends continuously
Don't worry, I will tell you about dividends after the categories.
Growth stocks
Growth stocks do not pay a dividend. Instead of paying dividends, they reinvest their money in their company for future growth. Growth stocks give higher returns compared to other companies. Growth companies grow continuously.
Defensive stocks
Defensive stocks are known as non-cyclical stocks. The stock has given a stable return over the past 10 years. The defensive stock price is not dependent on the country's economy. This stock has the lowest risk.
Speculative stocks
High-Risk, High-Reward The majority of these firms have a small market capitalization. These stocks are very volatile and very risky.
Your investment can be doubled or your investment can be zero. It's all about luck. An experienced investor does not focus on speculative stocks.
Stocks are divided into three different market caps.
1. Large-cap refers to a company that has a market capitalization of more than 10 billion.
2. Mid-cap refers to a company that has a market capitalization of between 2 and 10 billion.
3. Small-cap refers to a company that has a market capitalization below 2 billion.
Types of investment
1. Investing
2. Trading
Investing
When you invest money in stocks for a long period, it is known as investing. When you invest money for a long time, it is known as investing.
Investing in two types
Short term: stocks that are purchased and sold within a year.
Long-term-stocks that are purchased and sold over a year
Long-term stocks are more effective than short-term stocks.
Trading
Buying and selling of publicly listed shares during specific hours In trading, you can hold stock till the market opens.
Trading has two types.
1. Intraday
2. Futures and options
The Difference between Investing and Trading
You are the owner of the stock in investing, and everything depends on you.
You have the option of selling your stock or keeping it.
In trading, you have to sell your stock within a few hours. If you cannot sell your stock and the market closes, then your exchange will automatically sell your stock, and the selling price of the stock will be credited to your exchange account.
IPO
-IPO full form was an initial public offering. A company needs capital to grow its business and expand its infrastructure, so it offers a share to the public to get capital, and once the IPO closes, the company is listed on a stock exchange.
Note-IPOs were extremely risky because the price of the stock in the IPO was determined by the company's management and owner, and sometimes the stock price in the IPO was higher than its actual price.
How much money to start
There is no fixed amount to start in the stock market. Don't invest money you can't afford to lose, but having more money will help you survive in the market.
Be ready for losses.
If you are ready for profit, you should be ready for loss also. Nobody knows whether the market will rise or fall, but by conducting research, you can reduce your risk and increase your profit.
Accept your losses.
Some people do not accept their losses and when their investment is at a loss, they invest more money to cover the loss. This is not right because all experienced investors and traders face losses sometimes and they accept their loss.
Learn from your loss.
You have to learn from your loss. It will help you to make profits in the future and recover your loss. Loss is common in the stock market so ready to face loss.
Risk
1. In the stock market, you can lose your investment.
2. Don't follow tips for investing in the stock market.
Don't follow tips means many people, youtube channels, paid what's app groups, and paid telegram groups will give you tips to buy this stock. It will make you rich. All of these are scams by chance. Some people earn profit from these groups, but most of the people lose their money. For investing, conduct your own research.)
3. Don't panic when your investment is in a loss because in a panic you make the wrong decision and you invest more money, which will make more losses and you will leave the market.
4. Be ready for a loss.
5. Don't invest more money
Before investing in the stock market, you should have time, patience, confidence, motivation, and knowledge. If you do not have these things, don't invest money in the stock market.
How can a beginner start step by step?
1. Conduct research on the stock market and stocks.
2. Select your stock exchange
3. Establish a Demat account
4. Increase your budget.
Choose your investment type. Investing or trading
Pick your stock.
7. Buy it.
Look in this blog I tell you some basic things about the stock market in future blogs I will tell you some more things about the stock market. Stay Connected
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