What is a share market, and what are stock market basics for beginners?
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The stock market is a place that allows buyers and sellers of a particular security to negotiate a price and trade money for the shares of the said asset. Here are a few vital share market basics for beginners.
Create a diversified investment portfolio. Putting your entire capital in one stock or sector is risky. For example, if you have invested your entire portfolio in a single metal stock, in case of any bad news for the sector or the company, you may be staring at a massive loss. It is always wise to diversify across sectors and even assets like gold, real estate or bank deposits. Never put your entire capital in equities.
Do both technical and fundamental analysis before making an investment decision. You should only invest after thoroughly researching about the security and its past trends.
Only invest the money that you can afford to lose. Avoid investing in the share market using borrowed funds.
Minimise your losses using the stop loss facility. Do not hold positions and hope for a reversal. Set the stop loss limit and reduce your potential for losses.