Wondering how to earn money in the share market? Are you new to share market investments? Then this article is just for you. In this article, you will learn about the share market in detail, how it works, how you can earn money in the market, and a lot more.
What is the Share Market?
A share market can be referred to as a virtual market where buyers and sellers come together to buy and sell securities. There are two types of market one is the Primary market where shares listed for the first time via IPO are for sale.
Investors and traders who want to invest or buy shares of a company going for an IPO submit their application, and then the companies allot the share. The second type of market is the secondary market, which is referred to as the stock market, where shares are bought and sold every second.
In India, share market investments are gaining importance with the advancement in technology and awareness about financial investments in the recent past. So, this is a great time to invest in the Indian share market when you can earn good returns if you can invest in the right stocks.
How Does it Work?
Share market works via its participants. So, there are –
- Investors and traders who buy and sell the shares
- Brokerage houses facilitate the transactions done by these investors and traders
- Depositories that offer the share market account like Demat account or trading account, and maintain them.
- Clearing houses which provide the shares and money for the transactions
- NSE, BSE, and other stock exchanges list the shares that investors and traders buy and sell
- SEBI is the stock market regulator that regulates all these market participants.
How to Start Earning Money in the Share Market?
So, to earn money from the stock market, you need to follow the steps given below:
- Learn about the stock market: A stock market is a place that can offer you great incentives for learning about it. Are you wondering how? So, if you learn how stocks work and how the market works, then you can apply the same when you are trading or investing. Without learning about it and putting your hard-earned money can lead you to lose it all. So, first thing first, you need to study the stock market. You can read books, watch online tutorials, take online or classroom stock market courses, and other ways to learn about the market.
- Opening account: For earning money from the stock market, you need to invest or trade shares, and for that, you need open a share market account. You have to find a brokerage house that offers Demat and trading services and charges reasonable brokerage rates. Then you need to open free demat account, and you are all set to buy and sell securities in the stock market.
- Doing your analysis and research: Once you have the account ready, and trading platforms installed, you need to start your research. Start with one stock that suits your investment goals. It is always better to choose the stock of a company you know, or whose products you use in daily life. Once you gain experience in the market, you can research and analyze multiple stocks at the same time and invest. Look at the fundamentals of the company, you can find them on the website of the company or other financial websites. You can also do a technical analysis of the stock using the trading platform offered by your brokerage house. Once you are sure about which stock you want to purchase, open the trading platform and buy the stock.
- Monitoring your investments and trading orders: The next thing is to monitor the investment or trade you have executed. If the stock rises in price as per your assumption, stay invested, or sell if it goes in the opposite direction drastically.
- Asset allocation and reallocation: Always prioritize diversification of assets while investing and also while trading stocks. This will minimize risk and optimize returns.
- Have patience: Finally, you need to have patience when investing in the stock market. Markets are volatile so they will go up and down, don’t get too excited when it is going up or too demoralized when it is down.
Earning money in the stock market requires patience, understanding of stock analysis, and most importantly, your emotional stability. The more you learn about the market, the more you can earn from it.