If you are interested in online trading apps, you should approach a trusted financial firm offering an online trading platform. The app should provide features like opening a zero-fee Demat account, brokerage cashback and more.
If you are trading for the first time then you may feel it is a place where people make and lose their fortunes. However, the first step in online share trading is to understand the stock market. You should avoid these common mistakes while trading online.
Mistakes to avoid
If you are trading online for the first time then you should learn the basics of the stock market. You should learn terms like Going Long (first buying then selling), Going Short (first selling then buying), bid price, bid quantity, ask price, offer quantity, stock price changes and more.
You should learn how the various metrics are calculated like return on equity, book value, earning yield, GP margin, interest cover ratio, debt to equity ratio, market capitalization, dividend yield, price earning ratio and margin of safety.
Investors lose direction when they make unplanned investments. You should make a personal investment plan that includes your goals and objectives, the amount of money you are ready to invest, your risk profile and the capital invested in the various instruments.
You should never invest based on market speculation. You should do market research and gather data about the existing trends before you start to invest. Many stockbrokers provide technical analysis and minute-to-minute analysis of the stock market to help you make informed decisions.
You should try to balance unnecessary risk-taking and reasonable risks. Market experts suggest investing in the stock of established companies as these stocks may rise and not fall below a certain price.
Investors who just began trading usually fail to diversify their portfolios. Investing all the money in a single company or one type of investment is not a good idea. A market crash or a negative market movement can lead to huge financial losses if you do not diversify your portfolio. Your portfolio should consist of stocks of different companies, ELSS, mutual funds, futures and derivatives.
Investors often make the mistake of selling in panic or holding onto a losing stock. You should understand that the downward trend in the stock market is temporary.
You should select an online brokerage platform that provides all the features along with stock and scheme recommendations. The platform should provide an all-in-one account.
