9 Things You Must Know Before Starting Online Share Trading

Online trading is a popular choice these days as a means of earning a few extra pounds. However, being of speculative nature this market has its own risk of investment. Surely there are ways to get over it and make handsome profits. Hence, it is suggested that take preparation and jump into the market of maximum potential. Here are some suggestions before you get into the market to make your investments worthy.

When to buy and when to sale

The share trading market is one of the most sensitive one, even a slight change in the crucial parameters determining the movement of the market can be of major impact in terms of determining the price of a script. Before you invest your hard earned money into any share, be sure of the price at which you would like to sell it off. Holding a script for long just speculating a higher growth of the same in future is never a good idea as the future might come with a lower face value of the share as well. Determining your own level of expectation from your script is the first step taken towards avoiding any chances of incurring a loss.

You can never be sure of the next move of the market

Never judge the next move of the market based on the previous trajectory of it. Every single moment in the market is different and there is hardly any trend to go by. There are basic training available to make a judgement regarding the returning potential of a script that you can go through but predictions are never possible. As far as the trading market is concerned; probability is the ruling entity here and not a certainty. All speculation, judgements, prediction and forecasting are done based on probabilities and never certainties. Hence, when you decide on a particular share, the chances of profitability would be the key thing to you and the surety of it.

Get a grip on the filing companies

Filing companies are those who are fresh entrants into the market. There are startups as well as long existing companies in the market that are yet not listed in the stock exchange. When a company decides to go public, it enlists itself and issues a part of its shares to the public as IPOs. IPOs are surely a good way to get into the online share trading business. If you keep a track of the new players in the market, it would be easier to select a good one from the lot and make fortune out of it.

Long term is the best way out

Since the share market runs of random speculation backed by critical economic dimensions, there are always short term fluctuations visible in the market. The Sensex goes up and down every moment and the capital appreciations of a share get changed into depreciation within the twinkling of an eye. Hence it is always wiser to go for long term investments rather than short term once. Study the nature of fluctuations for a script and then decide the right time to sell it off rather than getting involved in intra-day transactions enhancing the risk level.

Dividends can be your friends in this market

Get to know about the companies that are getting listed within this financial year and also try to do homework on the performance and financial health of them. Once you know the best companies to invest in, get the IPOs once they are out. If the company performs to your speculative merits, there is a high probability that the company will register some profit towards the end of the financial year. In case of a profit, the company might declare dividends for all its shareholders which would be an additional income for you. Hence, dividends are the source of continuous inflow of money at regular intervals as long as you hold the script and the company does well.

You cannot judge the scripts easily

Never go by the common notion of this is a good script and that is a bad script. There is no such thing in the share trading domain. The script that is not paying today may become the highest earning one tomorrow. As already discussed, the probability is the dominant factor of this market. There are multiple parameters there to judge the merit of a script but a complete judgement taking all the critical factor into account is almost impossible to do. Hence, it is best to follow the basic rules to avoid losses and not to get into the judgement of scripts.

The face value does not determine the worth

In the share trading market, the face value of a script is not always the determinant of its worth. A script sold at INR10 might not be cheaper than another sold at INR120. It all depends on the potential of the script to pay you off the return. Higher the probability of earning a return on a script, greater is the worth of the same regardless of its face value. So while making the final decision for a purchase, do not go by the face value of the scrip rather get to know about the returning potential of it.

Get knowledgeable about the whole process

The more you get involved with the process of trading, the more this process will demand from you. An introspect into the entire market system and its crucial instruments along with the basic knowledge regarding the terminologies and operation of these domains a must to handle your investments carefully. Magazines, journals, newspapers, financial reports of the corporate houses can be of great help in acquiring the required knowledge in order to make wise decisions related to your investments.

Be certain of your goal and investment

There is no way that you can be certain of an investment done in share trading. The safest way to play smart is to determine your own goals for investment. Keeping all the financial aspects in mind, decide on the tenure for which you wish to do the investment and the amount you can keep aside for it. Then determine an approximate return that you may like to earn over that specific period of time. Don’t let the market play with you and take the control yourself. Once you see that your script has reached your expected level of return, sell it off and make fresh investment in the same way. This will save you a lot of effort and speculations.