How can we start investing in stock market?

• by Admin - 2016-06-27

To start investing in stock market one needs to have a demat account to hold the shares one buys. In order to open this account one can contact any of the SEBI registered share brokers who are member of NSE or BSE and start investing. However, if one wants to trade in Derivatives (Futures and Options) segment of the market, they need to have a online trading account. Traders prefer derivatives segment because of the leverage and returns they offer. While trading in equities (shares) is common, it is suitable only for non-active investors looking for long term investment. Also, when compared to derivatives, they are less volatile and in turn offer fewer opportunities while attracting higher capital requirements. Derivatives, on the other hand are leveraged products, so they require less capital, are more liquid as only through strict scrutinization by exchanges, derivatives on Individual stocks are offered. Where companies shares and derivatives (futures and options) differ from each other are in terms of expiry. While shares being held in demat account for investment purpose have no expiration date, i.e. they can be held for as much time as one prefers. On the other hand, one of the innate characteristics of derivative product is that they come with an expiry date also known as last trading day. As mentioned earlier, the derivatives are chosen carefully by exchanges form an immense contest between listed companies.

As of now there are more than 2236 companies listed in NSE (National Stock Exchange) but only 173 companies among them have their futures and options allowed for trading. As the stock market is so diversified and interrelated, on both national and international platform, it becomes very hard to track the market.

This extensive list of companies available for investing is often confusing to new investors who have to research exhaustively and choose the right company. And tracking and keeping updates on these companies is pretty hard task. The best way to do it is to choose a right brokerage firm to have your accounts with.