The stock market allows you to buy and sell the stocks of the companies that are listed on the stock exchange. This process is known as stock market trading. Companies list their companies in the stock market to raise capital to fund their expenses or to expand their business. By adopting smart trading and investment strategies and by choosing the right stocks, you can grow your wealth steadily. To become a stock market trader, you need to open a Demat account online. To understand the demat account meaning you can think of it as a bank vault that holds all the shares that you buy.
A demat account can also be used to hold mutual funds, ETFs (Exchange Traded Funds), corporate bonds, and other securities. To buy and sell these securities, you also need a trading account. With a demat and trading account, you can trade in the stock market easily.
A smart way to trade full-time. How to trade in the stock market and earn profits?
Here are a few ways through which you can earn decent profits from stock market trading:
Investment Portfolio Diversification
You should not invest all your capital in one stock as it exposes your capital to higher risks in case the price of that particular stock declines. Instead, you must divide your capital and allocate it to stocks belonging to different sectors. A smart way is to pick the leading companies in every sector. Investing in blue-chip companies belonging to diverse industries is one way of appreciating wealth without exposing your investments to significant risks.
Consider Going Part-Time Before Deciding for Full-Time Trader
Trading full-time can be stressful as you need to manage your living expenses from the earned profits. Instead, you can treat it as a side business and invest a part of the income earned through your primary income source.
Some investors start trading part-time and once they have gained enough experience in it, they start trading full-time.
Choose Stocks Wisely
You must choose stocks wisely as per your investment goals. For example, if you have limited capital, investing in high-growth mid-cap and small-cap stocks that are fundamentally strong can help. However, if you have enough capital, investing in large companies that have a proven track record can prove to be a wise decision.
Don’t use All the Margin
Many stockbrokers provide a margin i.e. they provide instant funds to fulfill your trading requirements. This margin can be leveraged to book high profits. However, you should not forget that the stockbroker will also charge interest for the upfront margin. Therefore, utilizing all of it is a risky proposition as it can affect your finances if a particular trade goes wrong. You should only use only that much margin that can keep your finances safe at all times.
Benefits of Choosing to Trade as a Full-Time Profession
Here are a few benefits of choosing to trade as a full-time profession:
- You need not devote your entire time to trading as a trading session runs for a limited time. In India, trading sessions start at 9.15 am and end at 3.30 pm and no trading is conducted on weekends and public holidays. If you decide to be a full-time trader, you can have enough time to spend on your other goals in life.
- Trading as a full-time professional can be lucrative as it allows you to build your career at your own pace. You can take your time to learn about different investment opportunities and explore them to earn higher returns from trading.
- As a full-time trader, you don’t have to be working under anyone. You are your own boss and if you prove yourself as a skillful trader, even your friends and relatives may ask you to handle their portfolios. You may take a part of their profits as a commission or can even charge a fixed amount to manage their investment portfolio. If you have enough credentials and experience, you can even register as an investment advisor or research analyst with SEBI.
- It is possible to earn enough money through full-time trading if you adopt the right strategies. Also, you will have to gain enough knowledge of stock market trading before commencing your journey as a full-time investor.
Defend Against Online Trading Scams
There are 10 ways in which you can defend yourself against trading scams with the best use of the Demat account application:
- To prevent banking fraud, use authentic and verified apps that are secure.
- Ensure that you browse information from secure sources that have “HTTPS://” before “www”.
- If you sign in from a public internet connection, you may put yourself at risk. Signing in from a secure connection is always recommended.
- While using your credit or debit card credentials for trading, be very sure of the two-step verification process.
- It is important to update your smartphone and desktop security to prevent security from getting compromised at any cost.
- Never share any sensitive information related to your Demat account over any media with anyone.
- Kindly do not respond to SMS, emails, or calls that are unsolicited.
- Do not click on a picture or misleading attachment in response to a request.
- Do not respond to calls that may ask for remote access to your computer.
- In case of any security breach in your bank account, kindly report the issue immediately.