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The stock market sees a large number of buyers and sellers of stocks every day, and all buyers and sellers can buy and sell shares respectively at their quoted price or the market price. But in the middle of all this, the investor needs to keep a few facets of the stock market in mind.
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- Choose a broker- To invest in stocks directly, you would need to be registered, which is not easy to get. So you need to choose an online brokerage firm such as 5paisa to buy and sell shares in the share market on your behalf. These companies provide facilities such as online trading, real-time execution of trades, technical analysis indicators such as charts, Bollinger bands, stock trading apps, etc. Brokers execute trades on your behalf and earn some commission per trade.
- Types of buy order-Buying orders can be placed either by ‘market order’ or by ‘limit order.’ In the former, stocks are purchased at the prevailing market price, whereas in the latter, stocks are purchased at a limited rate. For example, if you want to buy stocks of Samsung at $600 a share at a ‘limit order’, and the stock is currently trading at $650, then your broker will have to wait to acquire the shares until the price meets your limit. But if you have a ‘market order’, he can go ahead and buy at $650 a share.
- Mutual funds- It is a relatively safer way of investing in stocks. In this, a fund manager or a mutual fund advisor spends your money along with that of others who are invested in that fund. You can choose your scheme based on your financial goals. It is good for people who do not know much about financial markets.
- Buy stocks through IPO – Initial Public Offering (IPO) is the stage when a company’s shares are being openly sold to the public for the first time. IPOs are like a baby and stocks are a grown-up boy. Buying shares at this stage are very beneficial as they are very cheap. You can earn profits due to the cheapness of stock no matter how the company is doing.
- Direct Purchase of stocks – Some companies offer a particular type of program called Direct Stock Purchase Plan. Under this program, investors can directly purchase stocks of the company without the involvement of a broker. It is done with the aid of a transfer agent or plan administrator whose job includes day to day paperwork and transactions. The obvious advantage is that you save on the brokerages.
- Dividend Reinvestment Program (DRIP)-As the name suggests the dividend received from the company can be directly reinvested to buy more stocks of the company. It involves very nominal fees or nothing at all depending on the individual plan.
- Have a broad portfolio – Investing money in different business sectors is a good investment option. You can buy stocks of various companies such as pharmaceutical companies, real estate, retail industry, energy, and technological corporates. This type of investment strategy will prevent you from completely losing your money due to unexpected uncertainty in a particular sector of business.
- Buy low, sell high – Buy stocks of the company when they are cheap. The value or worth of each stock can be determined by a proper valuation of the company. It can be done by technical and fundamental analysis.
- Track your stocks – Use stock apps to keep track of stocks of different companies so that you can buy stock of companies when they are at a low price. It will increase your profits.
- Past trend analysis – Buy the stocks of companies which are promising and give high returns. It can be determined by analyzing the past performance of those businesses.