Over the past few days, we have seen Nifty hovering near its all time highs of about 8950-9000 levels.And many of us are yet to make our first step towards trading or investing in the Indian stock market.Today we will see how to make that first trade in the stock market to learn the basics and then grow yourself towards a seasoned trader.
To begin with, you would need a demat account and a trading platform which you can get through a broker. Depending on my experiences with using various trading platforms from different brokers I would come up with an article on How to choose your broker soon. For now let’s assume you do have a demat account and trading account in place and wondering which stock and how much should be your first trade.
Now depending on the trading account you choose, it may be one of the following type of login
- Desktop application
- Mobile application
- Webpage login
Remember that the first thing you need to do is get acquainted with the trading platform, order entry process and managing your positions. So I suggest you to enter some small order of any 1 share which costs around Rs 100 pe share. The reasons I suggest you to select a stock around Rs 100 are
- Once the contract note is generated , I would be easy for you to understand the brokerage and other charges on a percentage basis without any extra calculation
- Generally a share of about Rs 100 does give a upmove or downmove of about 1-2 Rs on most days , so again if you buy it for Rs 100 and sell for Rs 101, it would be easy to calculate the profit percent post brokerage
The above example should help you enter your first trade in equity and get familiar with features like order entry, market watch, open positions and also how the contract note is generated for every trade.
No matter if you are entering your first trade with some trading background or you are a complete newbie do remember the following points
Track the market : Before entering the trade, track the movement of the stock for at least some time. Know the day’s high – day’s low and the circuit limit for the stock. Generally Indian stocks have circuit limit of about 20%. You will need to have this knowledge before taking entry and exit calls in future so that you can understand the support and resistance levels in a stock price.
Start Small : Start with a small amount. If Rs 100 seems to be too small to you start with Rs 1000 or Rs 5000.Remember that you did not grab the 50 Kg weight on your first day to the gym and must have started with a modest 5 or 10 KG. Same applies here. Starting small will limit your losses and would give you invaluable experience for your future bets.
Hope for the best and prepare for the worst : Don’t expect instant success. This is just your first trade. So just try to focus on the learning that the profit/loss. As such, if you trade with a small amount the profit/ loss would be negligible. See how volatile the stock price is, How the mark to market positions are displayed, how the best five shows the buyers and sellers and the bids.
Hope this helps you to get started with your first trade in equity market. In case you intend to trade in commodities do read my post ‘Getting Started with MCX(commodity trading)’ as well.
Do leave your comments and share your experiences with your first trades.