What is Share Market?
The share market is the place where shares are issued or traded.
There is a difference between the share market and the stock market – a share market is where only shares are issued and traded. In contrast, a stock market deals with other financial instruments like bonds, mutual funds, shares, and derivatives.
Why Should You Invest In A Share Market?
Investing in the right field builds income and financially secures your future. There are good investment options like FDs/RDs, Insurance policies, Real Estate, Gold, etc. One of the most lucrative savings and investment options is the share market which comes with a higher risk factor but also attributes a much higher return on investment than other options.
Several studies have suggested that investing your hard-earned money in the right company shares can produce inflation-mitigating returns over a long period (5 to 10 years). Short-term investments in the share market can invite volatility but investing in the share market helps you make quick and big profits.
Different Types Of Trading In Share Market Investments
Share market investments are quite profitable when properly planned and monitored. There are various kinds of share market trading options, so you can choose one that suits your style of risk and return:
Intraday Trading
It refers to share market online trading on the same day you must buy and sell shares before the market closes. This style is called 'squaring off the trade' for investors seeking a high ROI.
Delivery Trading
It is a long-term investment in which shares are held for a more extended period. The investor should pay a total amount for transactions, and there is no share market trading time limit for the trade of shares. It would require only the delivery of shares to a respective Demat account.
Swing Trading
This short-term trade using technical tools usually lasts from 2 days to 2 weeks. This share market online trading requires higher capital, leading to higher margins.
Long-term Trading
This is for conservative than aggressive investors. A long-term trader invests in growing shares and researches the companies he has invested in, evaluating their balance sheets, sectors, latest news, etc.
Technical Trading
Technical trading requires a thorough market analysis wherein the traders understand stock price changes and make trading decisions accordingly. You need to have good knowledge of company shares and market swings, to invest in these aggressive shares. The risks are high, and so are the returns.
Arbitrage Trading
Arbitrage trading is about price differences in two or more markets or exchanges. It is only reserved for top share market online trading companies with an extensive network as it does not require a lot of analytical skills but more network speed.
Scalping
Scalping is about creating more short-term trades to take advantage of the waves. A scalper must have high powers of observation, excellent experience, and the ability to place accurate trades. A scalper doesn't mind losing a few trades to win a few. A scalper's trades can take anywhere from a few minutes to an hour.
Share Market Trading Time - Hours Of Agreement And Trading
The share markets follow a rolling agreement T+2. This means that every trade that takes place on Monday is organized on Wednesday. All action in the share market takes place during the share market trading time between 9.55 am and 3.30 pm, the Indian standard time (+ 5.5 GMT hours), from Monday to Friday. The timing remains the same for all the major stock exchanges in India, like the Bombay stock exchange (BSE) and the National Stock exchange (NSE).
Share Market Trading Tips
Before you start trading shares, you must open a Demat Account and a Trading Account with a reliable broker. Consider the following share market trading tips while share market online trading in the market:
Choose Companies With Strong Fundamentals
When you think of investing in the shares of a company, you must conduct thorough due diligence on the background and credibility of the company. You must look at various parameters such as income growth, net income, debt to equity ratio, stock splits, price/earnings ratio, market capitalization, issuance of dividends, etc. Moreover, you need to understand the different technical terms while conducting market research.
Always Start With A Small Amount
If you are a share market novice, you must start investing smaller amounts rather than large sums in a single company's stocks.
Don’t get into Emotional Investment Decisions:
Share trading revolves around market movements and the company's financial reports, so there is no room for sentiment trading. Don’t panic and sell shares in case the market crashes. Get professional help, and keep your patience.
Try Not To Use The Margin Facility
Opting for the margin facility is for professional traders who are well-versed with market research, analysis, and its technical aspects. It is recommended for beginners to avoid considering margin facility.
Share Market Trading Time Matters
The market is most volatile in the morning when the share market opens, it is best to buy some time before noon (when volatility is less) and sell in the evening (as the prices generally go up during this time)
Monitor The Market Diligently
Suppose you are a share market trader or investor. In that case, you must keep a tab on the recent transformations in the market, monitor the volatility, read the news regularly, and identify opportunities during share market online trading hours.
How To Trade in Share Market?
Investing in the share market can involve primary and secondary share markets.
Investing In The Primary Share Market Trading
Initial Public Offering involves investing in the primary stock market through IPOs. When you submit your IPO, applications are scrutinised, after which the shares are allocated based on demand and availability. You need a Demat account containing electronic copies of your shares. Besides, it is also essential to have a trading account that helps buy and sell stocks online.
You can also apply for an IPO through Net Banking using ASBA - Application Supported by Blocked Amount. You can block these funds for a particular amount in your bank account. Upon receipt of the allotment of the shares, the exact amount will be debited and the balance released. Once the shares have been assigned to traders, they are publicly traded, and you can start trading within a week.
Investing In The Secondary Share Market Trading
Secondary investment or trading in the share market means you would indulge in continuous buying and selling of shares. Follow these steps to start this kind of share market trading:
Step 1: Open a Demat account and trading account and link both accounts to a pre-existing bank account:
Step 2: Select Actions from your trading account – whether you wish to buy or sell.
Step 3: Select the price and wait for the buyer or seller to respond to this request.
Step 4: Complete the transaction online, after which you will receive shares or money for the shares you bought or sold.
Step 5: Make sure you consider the duration of your investment and the financial goals you want to achieve with your investments.
Documents Required To Open A Demat / Trading Account
Submit the following documents to invest in the Indian Share Market Trading:
- PAN card
- Aadhaar card
- A cancelled check of their active bank account with IFSC code, account number, account holder's name, and signature.
- Passport-size photo of the applicant.
- Documents showing that the applicant has a fixed income.
- A proof of address based on a list of documents accepted by your broker, custodian, or bank
The Role Of SEBI In Share Market Trading
Investing in the share market is risky; thus, a legal body needs to regulate and protect investors. The Security and Exchange Board of India (SEBI), with its acts - Companies Act and SEBI Regulations 1992, and the SEBI (Prohibition of Insider Trading) ('PIT') Regulations,1992 has been in charge of overseeing the secondary and primary markets. SEBI is responsible for both development and market regulation. It comes out regularly with comprehensive regulatory measures to ensure that end investors benefit from safe and transparent securities transactions.
Its primary objectives are:
- Protect the interests of equity investors
- Develop the share market
- Share market regulation
Conclusion
India is an emerging market and a tiny percentage of income earned in India is invested in the share market. India’s GDP is growing at a rate of 7-8% each year, and the financial market is relatively stable. The timing is right for foreign investors to trust the Indian share market, so you must lose out on the chance of earning good returns by investing in the share market.
Just follow some very basic share market trading tips like study your market and the companies diligently, rely on a stock broker with excellent credentials, choosing the best Demat account that gives you access to a hassle-free all-in-one trading platform, and learning about different types of trading in share market, before you invest. If you are a beginner, remember to trade and invest small amounts first and not take bigger risks with your hard-earned money.
Frequently Asked Questions
Are Online Share Market Trading and day trading the same?
No. Online Share Market Trading investors place orders over the Internet. In contrast, Day trading refers to a trading strategy in which a person buys and sells securities over a short period taking benefit of small price movements in the security.
What types of securities can I buy online?
You can buy any type of stock, bond, or mutual fund online.
How do I know if my company received my order?
High Internet traffic, market volume, and other system issues may impact access to your account and delay the brokerage company's receipt of your order. Check with your firm for their notification procedures. And note that the notification that the command has been received does not mean that the command has been executed.
What are the risks of online share market trading?
There is a risk of loss and high internet traffic, which can impact online investors' ability to log into their accounts or place orders. Online investors should refer to suggestions on message boards and conduct thorough research before following the practice. Furthermore, some online investors are tempted to "trade too much" by trading too often, which can affect investment performance, increase trading costs and complicate the tax situation.
Can I trade in online share market trading when the markets are closed?
Yes, if the broker allows it. Most brokers allow after-hours trading for clients with an online account. The stock exchange in India opens at 09:15 and closes at 15:30. The pre-open trading session takes place from 09:00 to 09:15. The exchange is only open on weekdays.
If you want to trade before or after market hours, you must place an After Market Order (AMO) by selecting the AMO option after you have logged into your online trading account. This option is intended for investors who, for whatever reason, cannot access the exchange during trading hours.
Can I have multiple Demat or trading accounts?
You can have multiple Demat or a trading account with the same or a different broker.