Stock market is a place where buyers and sellers meet and decide on a particular stock price and perform buying and selling. Buying and selling of these stocks is known as trading. Trading should be performed by utilizing accurate stock tips to minimize risk.
But Nowadays, physical trading does not take place. Due to advancement in technology, trading is performed electronically via computer.
Trading in stock market requires following process that should be followed by traders:
1. Choose the broker:
Trading requires SEBI registered member of stock exchange. It can be a brokerage firm or broker-dealer. A stockbroker is a professional of stock market that performs trading on behalf of client and get return as a fee or commission.
Stock broker will provide a trading platform to the traders by which trading takes place. Authentication of stock broker should check by the membership number.
Unlike bank account, transaction of shares take place in Demat account in terms of Depository. Without Demat account, one can not able to perform trading in stock market.
3. Selection of investment medium:
Learn various medium of investment such as equity market, commodity market, derivative market. Selection of investment medium plays a vital role in reducing the risk. Right medium at right time can increase the return on investment.
Commodity market involves less risk in comparison of other investment medium due to small change in price of commodities.
Traders should invest in the medium which has diversified portfolio such as commodity market, nifty and sensex. These segments diversified the risk and reduce the risk involved with the investment.
4. Place an order:
After choosing investment medium, traders should place an order. Order placing can be performed by either trader itself or stockbroker on the instruction of trader.
There are two methods for placing an order:
Online Stock Trading – In this method, the order will be placed by a trader itself. Online medium is required for the trader to place an order that will be provided by broker.
Offline stock trading – In this method the orders will be placed by the broker on behalf of trader. Trader will give the instruction to the broker, in which stock he/she want to invest. On the basis of this, broker place an order.
5. Execute an order:
Broker will execute the order by making contracts. If order is placed by online trading, then order is sent to the broker first rather than directly to the securities market over Internet, who will decide that order will go to which market for execution.
Hence above steps should be followed by traders who are willing to trade in the stock market and get high return from stock market trading by using stock market tips recommended by advisory firm. Selection of investment medium should be right to avoid risk involved with each segment of stock market.