How to learn share market: Step by step guide for beginners

I’m sure you’ve heard of the little thing called the stock market. I mean, it’s impossible to open the newspaper without reading something about the stock market, right?

Do you know what the stock market is?

No, it’s not a stupid question.

Do you know exactly what the purpose of the stock market is? Do you know what happens there all day, everyday?

The stock market helps in the trading of securities. It is a place of trading of Stocks, Futures, Options, and Currencies. The traders trade via computerized platforms that a stock exchange provides them with.

Here is our video that explains “How stock market works”

People willing to take part in the stock markets in India are required to have Trading and Demat accounts of their own with the stockbrokers. Trading in the Indian stock markets takes place during specific market hours in every week from Monday to Friday.

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Sounds simple enough, right?

This brings me to my next question.

How does one trade and invest in stocks?

How does a person start off, exactly?

Firstly, a fresher willing to invest in the Indian stock market needs to learn about the same. The knowledge and understanding one gain by reading/studying can be implemented on live market.

In order to become a successful investor, one first needs to understand the basics of the stockl market; what makes the markets volatile, what is the reason behind the volatility of the indices, methods of determination of the share prices are some questions that one has to understand8 before he/she invests money in the stock market. Otherwise, he/she will end up being an irrational investor.

Initially, one needs to learn about stock markets.

Here is the Beginner’s Guide to the stock market

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Sounds like a lot of hard work, right?

Well, my friend, that is unavoidable.

In order to gain an idea of how or in what direction the stocks tend to move, you will have to do copious amounts of reading and research.

There are no shortcuts.

Here is a list of some websites for studying and understanding the Indian stock market.

  1. Investopedia: It provides plethora of information about different financial terms.
  2. Beginner’s Guide: It is an ideal platform for the ones who want to start their investment journey in the stock market.
  3. The website/App can be used to stay updated with the latest news and stock quotes. (Screenshot)
  4. In case one is in need of financial data for analysis, he/she can refer or moneycontrol. If one needs more data, in such a case, the annual reports of the companies can always be downloaded.
  5. Marketsmojo: This website/App can be used for the quick analysis of the stocks.
  6. NSE & BSE websites: One can get updates about corporate actions in the websites of NSE and BSE.

Well, that takes care of the background reading that you need to do. I apologize in advance for the amount of homework I’m giving you.

This is, however, only step one in the journey to become a successful investor.

So, let’s move on to the next obvious question.

What is step two?

Secondly, a prospective investor is required to choose the right broker. You and I cannot buy shares directly from the stock exchange. A broker is the one who has the authority to buy and sell the shares on the exchange.

One can either choose a full-service broker or he may go for a discount broker or an online broker. The choice of a broker depends on what requirements a prospective investor is having. You can easily compare stock brokers & find the one that suits your requirements.  You will get all the details of the brokers there. A stockbroker is going to help an investor in facilitating access to the trading terminal. In order to open a Trading account & Demat account with a stockbroker, a person is required to furnish his/her valid ID and address proof, PAN card & bank account statement.
Well, now that you know how to open a demat account, how will you know which stock to buy and at what time?

This is where the real hard work comes in. The list I gave you before was just a taste.

I’m not kidding.

After one is done with the second part, the next thing is to do own research before opting for investment in the stock market. One can refer newspapers like The Economics Times, business channels like Bloomberg, CNBC TV 18, ET Now and CNBC Awaaz etc. for stock specific information or market news. The investor is required to choose companies to invest in. While making choice of the companies, comprehensive background research the same is to be carried out, primarily brand, turnover, and profit. Research methodologies that are discussed so far fall under the scope of Fundamental Analysis.

There are two basic methodologies of equity research.

  1. Fundamental Analysis

What is Fundamental Analysis?

Fundamental analysis is nothing but investigation of the company. It investigates financial condition, management, product, growth, performance of the company etc. It is extensively used by long term investors.


Here are two basic videos of the fundamental analysis which will help you to get insights about the fundamental analysis.

Fundamental Analysis part 1:


Fundamental Analysis Part 2:

In order to learn Fundamental Analysis, one can read a lot of books. The few books can be suggested as follows :-

a)Security analysis by Benjamin Graham.

b) Common stocks and uncommon profits by Phil Fisher.

c) Intelligent investor by Benjamin Graham


2. Technical Analysis: It is extensively used by traders to understand show term trends and price patterns

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Technical Analysis does not lay emphasis on the immeasurable, unquantifiable, unforeseeable magnitudes of unknown economic and noneconomic variables. It is the study of price action for the purpose of determining probable future events assuming that history repeats itself.

It is a method of evaluating financial securities by analyzing statistics that are generated by market activities like historical prices and volume. Technical Analysis makes use of charts and other tools for identifying patterns that can suggest future activity. Technical Analysis can be used alone or in conjunction with Fundamental Analysis for better results.

Here is our video on “How technical analysis started”:

In order to learn Technical Analysis, one can take note of the following points given below.

  1. Zerodha’s Varsity:

This is an initiative started by Zerodha, a discount broker. They have covered all the basic & important topics of the technical analysis.

2. A person can follow the technical analysis lecture series by Investopedia website which contains a plethora of information about technical analysis. Investopedia has covered almost 11 basic and important topics of the stock market.

3. Reading books on Technical Analysis:

a) The candlestick course by Steve Nison

b) Japanese candlestick charting techniques by Steve Nison

c) Technical analysis of the financial markets: A comprehensive guide to trading methods and applications by John Murphy

d) Beyond candlesticks: New Japanese Charting

e) The new market wizards by Jack D Schwager

Steve Nison was the first trader who started applying technical analysis (Japanese candlestick charts) on the stock market.

I’ve been piling more and more work on you all this while, haven’t I?

As unfortunate as it may be, I’m afraid all the above is unavoidable.

When it comes to share trading, there are no shortcuts. You have to devote time and do the necessary study. Otherwise, you’ll end up losing a lot of money.

Now for the good news.

With regard to the capital of around Rs. 10,000-15,000 it is not too small for making an entry to the stock market.

A prospective investor can divide his/her amount for classifying it into groups like a high risk, moderate risk, and low risk. As he/she is a fresher in the stock market, therefore it is recommended for him/her to make choice of the stocks which have low volatility for the group of low risk. But, it is to be advised to not to fall into the trap of penny stocks. He/she should rather invest in the stocks which are low return promising and are less risky in nature.

Initially one should invest in a defensive mode. After learning from your initial experience in the stock market, you can then start investing aggressively.

For example, one can initially start investing in blue chip or large cap shares. Later on, he/she can invest in small cap & mid cap stocks, where risk factor is comparatively higher than large cap stocks.

There are a few things one should consider if he/she is a fresher in the stock market.

An important thing to take note of is whether a person is interested in investing in the market for a longer duration, or he/she wants to day trade or trade for a short term.

A person has to use stop-losses to keep a check on losses in day trading. A realistic expectation is a key to success and one has to set target profit in the trades he/she takes.

An individual is required to do his/her own homework before committing his/her money to the stock market. He/she can put money into the market that he/she cannot afford to lose.

After all the homework I’ve piled on you, and the endless advice I’ve been giving you, you must not be feeling too fondly about me, right?

But you know what?

All the study and all the worry becomes worth it once you start. The rush that you get when you make a profit for the first time is absolutely indescribable.

Of course, one can never be too cautious when it comes to share trading, but at the same time, you should not overdo it.

So keep in mind all the advice. Study well before trading. And if you wish to add something or leave a comment, feel free to do so. Happy trading/investing!

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