How to lean to invest in stock market?
There are a lot of ways to learn about stock market and investments. The more you learn, the more you analyse, the better you will earn in the market. Here are some of the best ways to learn how to invest in the stock market:
1. Join a stock market institute: There are a lot of stock market institutes out there providing knowledge and guidance about the stock market. They provide all types of courses in trading such as derivatives, commodity trading etc. In Delhi, the Institute of Stock Market, Motinagar is one of the best institutions providing all types of courses in trading. For a beginner, their Star Trader Pro course is the best.
- Take online classes: There are a lot of websites and online institutions that provide stock market courses online. such courses are quite student friendly as they can be taken from anywhere and at any point of time.
- Watch CNBC and other news channels, go through their stocks analysis and observe how they move with time.
- Follow some popular finance bloggers, see how they analyse the market. However, do your own research before making an actual investment.
Q2 what are the best blogs for Indian stock market analysis?
When it comes to investing in the stock markets, it is always advisable to rely more on practical knowledge and first hand analysis instead of theory. An investor must always know how the stock market actually works and should be well prepared and trained before making an investment.
Shares are a part of a company’s capital that can be purchased by the public. This entitles the shareholder to the future profits of the company and the right to make business decisions. The primary market where sale and purchase of shares takes place is called the stock market.
The prices of stocks are decided by the simple calculation of supply and demand. The potential profits that one can hope to get in future. The basic idea behind shares is for the growth of companies. Releasing shares enables the companies to meet large capital requirements and ensure timely growth in the market.
Following are the steps to learn to invest money in the stock market:-
- Learn the basics of finance and accounting. Learn how to study the financial statements of different companies, especially, the accounting ratios such as PE and PB.
- Select a company of your interest. Go through each and every thing related to that company and that sector. You should know about all the recent news and changes in the company.
- Make a list of all the companies of your interest. Take out the leading companies in each sector.
- Open a Demat account.
- You can now start trading in the stock market. Take it slow for the first few months. Be patient, gain experience and keep learning.
The three biggest mistakes that beginners in the stock market make are:-
1) Trading only in stocks
As a beginner, you should never invest all your money into shares at once. Such markets possess a great amount of risk which can be overcome only through a great amount of analysis. Only when you have gained a bit of experience in the functioning of the market should you increase the amount of your investment in these markets.
2) Not maintaining enough liquidity
One should realize that a certain amount of cash liquidity needs to be maintained and not all the funds available should blindly be invested into stocks. Only a part of the funds should be used for investments.
3) Trade using debts
One must never take loans or use debts to trade in the stock market. A broker would always want you to pool all of your money into trading. However, you must not give in to this trap.
These are some of the best books to learn about the stock market:-
1. How to Make Money in Stocks by William O’Neil
2. One Up On Wall St by Peter Lynch
3. Buffett: The Making of an American Capitalist by Roger Lowenstein 4. Reminiscences of a Stock Operator by Edwin Lefèvre
5. Market Wizards by Jack Schwager
6. Trade Your Way to Financial Freedom by Van Tharp
7. The Intelligent Investor by Benjamin Graham
8. A Random Walk Down Wall Street by Burton Malkiel
9. The Little Book of Common Sense Investing by Jack Bogle
10. The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor by Howard Marks
To make money in the stock market, it is important that you understand how the stock market works, who the major players in the market are and how they manipulate the stock market results. For this, one needs thorough guidance, technical know-how, and experience.
There is a plethora of Whatsapp groups solely created for discussions related to the stock market, major headlines of the news and other market updates. At the Institute of Stock Market, we maintain a separate Whatsapp group for our students for discussions related to the stock market.
There are several ways to learn how to trade in the stock market:- 1. Take a course online 2. Join a Stock Market Institution 3. Learn from books
A share is a part of the capital of a company. When you buy a share of a company, you contribute to the capital of the company, which entitles you to a share of ownership of the company. The market where the trading(sale and purchase) of shares takes place is called the share market.
• Always do a thorough analysis before investing in any stocks.
• Don’t get emotional about a particular stock.
• Always be reasonable as to why you purchase a particular share.
• Never be afraid to put money off the table
Superstitions play an important role in the stock market: At the BSE, there is a bull statue in front of gate number 2 of the building. It is believed that whenever that gate is opened that stock market crashes. The door was first opened in 1992, soon after which, the harshest Mehta scam took place. The second time the door was opened in 2001 when the US president visited the country and there was a major crash in the market. The third time it was opened in 2008 to install a new statue and what happened moments afterward need not be told.
It is never about the time to invest, rather it is about how you invest in the stock market. It is important that you make the right analysis and perform sufficient research before investing. The more knowledge you gain about the stock market, the more is your earning potential.
The secret to making money in the stock market is not to follow what the crowd is doing but to make your own trail. Some of the best tips to make money in the stock market are:- • Invest in businesses and not just stocks • Invest your money for a longer duration • Analyze and research about stocks and look for greater bargains • Stay away from the hot stocks
The stock market is an open system, where money keeps on generating by the profits earned by the companies, which are returned to the shareholders. If the stock market was a closed system, someone would have to lose money for another to make money.
It is true that about 60-70% of the people lose their money in the stock market. However, it is important to know the reason why people lose their money. It is because people think of the stock market as a tool to gain money quickly, which is not at all true. Making money in the stock market takes time and efforts. One has to do a lot of research and analysis before investing their money.
It is very crucial for any stock market investor to learn how the stock market works. here are some of the ways to learn stock market strategies:-
• Internet: there are a lot of websites out there to gain knowledge and learn about the stock market and get up to date information about the same.
• NEWS: CNBC, NDTV-Proft etc are some of the news channels which one must follow on regular basis to get updated about any events taking place in the stock market and also formulate strategies.
• Join a Stock Market Institute: this is perhaps the best and most reliable method to learn about the stock market and gain knowledge about stock market strategies.
Such institutions provide appropriate guidance and knowledge to properly use various methods and tools to perform research and analysis.
As a teen, one must work on clearing the fundamentals of the stock market before putting actual money on the line. Take time in proper analysis and research before investing. Start with smaller amount of money and avoid risky transactions. Consider investing in mutual funds.
Nobody can predict a stock market crash. If they could, they would be richer than any known billionaire. However, considering the current market scenario, a bearish phase is possible.
|How to make money in stocks- William O'Neil|
|One Up On Wall St- Peter Lynch|
|Buffett: The Making of an American Capitalist- Roger Lowenstein|
|Reminiscences of a Stock Operator- Edwin Lefevre|
|Market Wizards- Jack D. Schwager|
|Trade Your Way to Financial Freedom- Van Tharp|
|The Intelligent Investor- Benjamin Graham|
|. A Random Walk Down Wall Street- Burton G. Malkiel|
|The Little Book of Common Sense Investing- John C. Bogle|
|The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor-HOWARD MARKS|
|The Little Book That Beats the Market- JOEL GREENBLATT|
|Liar’s Poker-Short Hodder|
|Alchemy of Finance-George Soros|
|Fooled by Randomness--Nassim-Nicholas-Taleb|
|Japanese Candlestick Charting Techniques- Nison|
|Extraordinary Popular Delusions and the Madness of Crowds-Martin S. Fridson|
|Common Stocks and Uncommon Profits-Philip A. Fisher|
|Irrational Exuberance-Robert J. Shiller (Author)|
|When Genius Failed: The Rise and Fall of Long-Term Capital Management- Lowenstein Roger|
|Encyclopedia of Chart Patterns- Thomas N. Bulkowski- Thomas N. Bulkowski|
|Poor Charlie’s Almanack: The Wit and Wisdom of Charles T Munger- Charles T Munger|
|Value Investing: From Graham to Buffett and Beyond- Bruce C. N. Greenwald|
|Security Analysis: Sixth Edition, Foreword by Warren Buffett- Benjamin Graham|
|The Snowball: Warren Buffett and the Business of Life- Alice Schroeder|
|The New Market Wizards- Jack D. Schwager|
|Fooling Some of the People All of the Time, A Long Short (and Now Complete) Story- David Einhorn|
|Warren Buffet- Atul Kahate|
|Stocks for the Long Run- Jeremy Siegel|
|You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits- Joel Greenblatt|
|What Works on Wall Street, Fourth Edition: The Classic Guide to the Best-Performing Investment Strategies of All Time|
|The Essays of Warren Buffett: Lessons for Corporate America by Lawrence A. Cunningham (Author|
|Stock Market Investing for Beginners: Essentials to Start Investing Successfully by Tycho Press (Author)|
|The Dhandho Investor: The Low-Risk Value Method to High Returns by Mohnish Pabrai (Author)|
|Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude by Mark Douglas (Author)|
|Charlie Munger: The Complete Investor by Tren Griffin (Author)|
|The Little Book of Value Investing Christopher H. Browne (Author)|
|Trade Like a Stock Market Wizard: How to Achieve Super Performance in Stocks in Any Market by Mark Minervini|
|The Little Book That Builds Wealth: The Knockout Formula for Finding Great Investments by Pat Dorsey (Author)|
|The Warren Buffett Way
Robert G. Hagstrom (Author)
|VALUE INVESTING AND BEHAVIORAL FINANCE: INSIGHTS INTO INDIAN STOCK MARKET REALITIES by Parag Parikh (Author)|
|Damn Right!: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger by
|Snowball: Warren Buffett and the Business of Life by Alice Schroeder|
|Value Investing: Tools and Techniques for Intelligent Investment by James Montier|
|The Manual of Ideas: The Proven Framework for Finding the Best Value Investments by John Mihaljevic|
|The Art of Value Investing: How the World’s Best Investors Beat the Market by John Heins|
|Buffettology: Warren Buffett’s Investing Techniques by Buffett|
|The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market by Tobias Carlisle|
|Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week by Phil Town|
|The Money Game By adam smith|
|Wall Street Money Machine: New and Incredible Strategies for Cash Flow and Wealth Enhancement by Wade B. Cook (|
|Education of a Value Investor by Guy Spier|
|Wall Street Money Machine: New and Incredible Strategies for Cash Flow and Wealth Enhancement|
|The Little Book That Still Beats the Market by Joel Greenblatt|
|Beating the Street by peter lynch|
|Applied Value Investing: The Practical Application of Benjamin Graham and Warren Buffett’s Valuation Principles to Acquisitions, Catastrophe Pricing Execution by Joseph Calandro|
|Following the Trend: Diversified Managed Futures Trading (Wiley Trading) Andreas F. Clenow (Author)|
There is never a necessity that a stock market crash will take place. It is important to know that a bearish phase and stock market crash are NOT synonymous. A crash is much more devastating, for example, the crash of 2008, 2001 etc.
The stock market is an online marketplace, where the sale and purchase of shares of different companies take place. The stock market is the point of interaction between the buyers of stocks and the sellers
Some of the reasons for the deterioration of the Indian stock market are:- 1. Difficulty in procuring crude oil from Iran 2. Depreciation of Indian rupee against dollar 3. India current account deficit 4. Increasing interest rates by the RBI.
Trading in the stock market is neither a job nor a business. You are your own master. If by “make a living”, you mean earning money, then yes, anyone can make a living out of trading. It is a discipline in itself and a skill.
The stock market is a level two chaotic system. It cannot be predicted accurately. Creation of a mathematical model that can accurately predict stock market would lead to a paradoxical situation, since, the stock market would react to whatever predictions the model would give.
To learn about the stock market, it is important that you understand how the stock market actually works. You need to have an understanding of the basics of the stock market. For this, read books from different authors and collect information from multiple sources. Work with different traders at first and learn from their mistakes.
It is often said that trading is a “lone-wolf thing”. One can learn from others, one can follow what others are doing, but in the end, to be a successful trader, one has to make his own strategy and trade on his own.
The simplest answer to this question will be “READ”. The more you read, the wider is your knowledge base and the better is your understanding of the stock market. As a beginner, you need to put a lot of time on analysis and research of the shares you are interested in.
In a stock market crash, one must spend on ostentatious assets. It is because, at the time of a stock market crash, the prices of such items fall to a minimum, which rises up after a few years.
According to warren buffet
Never count on making an excellent sale. Have a purchase or retail price be so attractive that even a mediocre or broker sale gives good results. The better sales will be the frosting on the cake.
Our business is making excellent purchases – not making extraordinary sales.
Business must have two characteristics:
(1) The ability to increase prices rather easily without fear of significant loss of either market share or unit volume, and
(2) The ability to accommodate large dollar volume increases in business with only small additional investment of funds.
Accounting numbers, obvious, are the language of business and as such are of enormous help to anyone evaluating the worth of a business and tracking its progress.
Great companies = Float + Investment + Cash with higher return ratio
The very ends of the two 'wicks or tails' (the thin lines extending towards either end) are the highest and the lowest prices a stock hit during the trading. The ends of the coloured block part represent the beginning price and closing price for the day. If the block is in green color then the stock closed above the day's start. If it is in red color, then the stock closed below the day's start.
How to know when to sell or buy?
If we go by trends, which is what almost all of technical analysis like studying candlestick charts are all about, you have to look for a continued trend of either green candles or red candles. If there are multiple green candles one after the other, there's an up-trend in the price and it may be a god time to buy. On the other hand, if red candles follow each other in droves, there's a down-trend and you may want to sell.
There are 2 types of assets
- Non-current assets
- Current assets. (Call it by any name, the intent here is to classify assets on the basis of its duration,
Generally assets which are held for more than 1 year are non-current, otherwise, they are called current)
The significance of assets:
Non-current assets: Major component of this head is PPE( property, plant and equipment), PPE are assets which are held by a co. For running a corporation may be for production it includes other assets such as furniture and fixtures, So PPE can be compared with Turnover to know how well company is utilizing its assets.
Current assets: These assets generally include those assets which will be converted into cash within a year, also they depict the liquidity position of an organisation.
It includes Stock, Debtors, Short term investments etc.
The significance of liabilities:
As like Assets, Liabilities can also be classified into two part:
- Liabilities which are to be paid within a year time
- Labilities which will be paid off after a year or more.
Now which are to be paid within one year directly impacts liquidity position and which are to be paid later on depicts the Sources through assets have been acquired (Obviously other than Owners funds).
When you will run through the liability side you will come across Payables to Vendors (Raw material suppliers) , Bank OD, Payables to Employees (You can get to know how good it is paying in to employees because most of the time major component of it will be the Last month of Financial year's Salary) and then the major component of the liabilities will be the loans obtained from various financial institutions.
This represents the owner's fund i.e. Investor's share in the Company.
How to identify Profits?
Two sources (Ignoring the documents other financial statements prepared by a Company): Profit and Loss a/c and balance sheet.
In P/L a/c you will find multiple types of profits and the most significant are:
- Operating Profits: This shows the profits earned after the considering expenses of manufacturing (Obviously if the company is not a Service provider), So this shows how well the company is performing its operations.
- PBT/PAT: Profit after tax/Profit before tax shows the profits earned after deducting every expenditure such as Administrative expenses, Marketing expenses and other expenses.
Another source to determine Profit (Precisely Net profit after tax) is through the balance sheet, although It will get a lil bit complex anyhow it will answer your query. So, you have understood the equity portion and any change in the equity from the last year will be my profit, provided I haven't issued any more equity in the current year.
If you really wanna know how well company is performing better go through the Cash flow statement which shows the actual cash inflow (After all that matters, in the end, is how much money I have in my pocket).
As P/L account includes many non-cash expenses such as Depreciation and amortization and they don't result in cash outflow but reduces the profits
Why assets and liabilities are always equal?
One simple example: You go to a bank and borrow Rs. 500, So now you have an asset, rather I would say Current asset of Rs. 500 (Cash) and A liability as well of Rs. 500 (Loan from the bank), So Asset=Liability=500.
Now you purchase a Machine worth Rs. 250 and now the equation is Asset (Cash=250+ Machine=250)=500=Liability (Still the whole amount is payable to the bank).
Assets = Liability + Capital
So now you take any transaction and any combination, Assets will be always equal to liabilities.
Earning money is never easy if you want to earn it in the right way. Although term “easy” and “right way” both are subjective.
Stock market demands a lot of investment, more so of time than money. You need to monitor the market continuously, and you need to have knowledge regarding financial market research.
If you don't want to invest a lot of time in learning stock market analysis, you can always take help from a mentor.
My advice will be to learn stock market, stock analysis like fundamental analysis and technical analysis, when you are done with this part, you will be better understand the intrinsic value of the stock and hence buy or sell.
One important thing that one needs to remember is it is always challenging at the start, but as one gets more experience, it takes less time in analyzing the balance sheet of the company. Moreover, there are market sentiments also involved in the stock market, and through experience one learn how to take that into consideration.
reviewed by mentors
FINANCIAL FRIDAYS: THE WTF! ON THIS STOCK MARKET 'CRASH'
I just want to tell people how much BS the news vomits every day and how it's affected the markets.
Instead of the 20 reasons I wrote this month, let me give the 3 or 4 most important (all 20 took up 5000 words, with another 5000 words on angel investing).
China growth is slowing. So the Wall Street Journal, which I used to write for, is saying "Chinese economy reeling".
China is GROWING. It used to grow 10% per year because it was communism and 2 billion people were farmers.
Now it's "going down" to 7% growth.
Horrors! The world is over.
But what if it continues?
Guess how much we "sell" to China per year. I put "sell" in quotes because newspapers make it sound fancy and say we "export". BS economics writers.
Less than 1% of our Gross National Product is sales is to China.
So even if CHINA DISAPPEARED COMPLETELY the US would still have a growing economy.
Oh, did I mention China is not disappearing? It's GROWING. At a faster rate than the United States.
B) INTEREST RATES MIGHT RISE
The Fed lends money to banks. When the Fed rate is low, savings rates are low.
When savings rates are low, people put money in higher risk stocks than in savings.
When savings rates are high (7%+) people put money in their savings account because its safer (it really is).
That's why people say "when interest rates go up, stocks go down."
Oh my god! (sorry for the repeat).
The Fed Rate is at 0.25% and has been for six years.
They SHOULD raise it to 0.5% or even 2%. Nobody is saying, "Oh, now I should move out of the stock market and get 2% savings rates.
And, by the way, the Fed only raises rates when every indicator suggests that companies are growing at a fast rate.
Let's look at recent times the Fed raised rates. Through most of the 90s (the markets went straight up). 1999, the Nasdaq 100 went up almost 100% over the next year (and value stocks continued to go higher ever after the crash).
From 2002-2007 the Fed raised rates every chance it could get. The market went constantly up.
And none of that was from such a low base of 0.25%.
So newspapers, PLEASE STOP LYING
C) IS THIS LIKE 2009?
In March 2009, the market hit an all-time low.
Fortunately, I ended it and saved the world. No kidding.
I lived at 40 Broad Street, directly across from the New York Stock Exchange.
On March 9 I went out and bought 100s of Hershey's chocolate bars.
Chocolate encourages people to take risks and makes people happy.
Chocolate makes people feel like they are in love.
And willing to take risks.
All of the traders walking into the exchange were depressed. They were all looking at the ground.
I started to approach with my chocolates. At first the guards stood up and gripped their guns. Dogs were barking.
But then I handed out chocolates. Traders would look up, smile, and take the chocolate. Nobody refused me.
And yes, that day was the bottom of the market. I documented on Twitter before I started handing out and when I was done.
It's not bragging if it's true.
BUT, I can't take all the credit.
People blame the 2009 crash on the housing crash. This is not true.
Housing prices peaked in 2006. The housing crash was only one small piece of the puzzle in the 2009 crash.
I won't get into all the details of how banks account for mortgage debt.
But basically, the FASB (financial accounting services board) changed the rules mid-flight on how banks should account for their debt. It was a horrendously strict rule change that forced banks out of business.
When did they make this rule change? Late 2007, at the peak of the market. Then the real crash happened: the banking crisis.
Everyone begged them to change the rules back. When did they change it back? March 2009. Coincidence? The market went straight up.
But three is enough. We covered the main issues: China, Interest rates, and the post-traumatic stress everyone is feeling about 2009.
But here's what we know at the very least:
A) It's not about China!
B) It's not about the Federal Reserves Interest Rate!
C) And it's nothing like 2009!
The world is a hard place to live in.
People always say, "you're the average of the 5 people you spend time with".
But this is true also: "you're the average of the five things you read".
If all you do is read newspapers (and the major ones like the most) then you will be misinformed and in a constant state of anxiety.
I know I was until I STOPPED reading them. Then I felt free.
reviewed by mentors
These are some of the most crucial rules to stay PROFITABLE in the stock market -
- When you open trade you should make sure that it ends in the following 4 ways.
- A Small Profit
- A Big Profit
- A Small Loss
You should be absolutely sure to avoid big losses at any cost. As long as you avoid big losses you can be profitable in the long run.
2. You should have a good entry as well as an exit strategy. Almost each and every trader concentrates all their attention towards improving their entries into the trade and no one seems to care about when to exit. I’ve experienced that having a good exit strategy is more important than entry strategy and the best way to improve your exit strategy is to have a good Risk-Reward ratio. For implementing this use Target and Stop-loss for each and every trade. If you enter a trade without placing a stop-loss then trust me you are digging your own grave!
Personally, I use 1:2 as my Risk to Reward ratio and it seems to really suit my trading style.
3. Use proper Money Management. It takes lots of losses to understand this crucial point. Unless and until you don’t implement good money management you are going to lose money no matter how good your strategy is. Basically, good money management implies undertaking a certain amount of risk that you can afford to take. Use stop-loss and place it at a price you can afford to lose.
If you really follow these 3 rules with proper discipline then I can vouch that you will perform well in the long run. I consider myself lucky that I’ve learnt these things without facing much losses and at a very young age. I hope this answer proves to be helpful!
1. Read Good Books
2. Learn Technical Analysis
3. Read articles and blogs
4. Virtual trading is important
5. Market Psychology
6. Follow good traders
7. Opt for Professional degree