How do I trade my first stock
Posted On June 26, 2018
How do I trade my first stock?
In the previous post, you managed to open your trading account. Now comes the main question, how do I buy my first stock.
You need to do some background study for this. How would you select a stock and how will you decide when to buy that stock?
It totally depends on the type of trading you want to do. If you are a working professional with a 9-5 job, probably long-term investing is a good idea for you.
A top-bottom approach will be good in that case. Sectoral analysis helps you filter out stocks that have the best long-term viewpoint. Pharmaceutical, finance, banking, PSU, textiles, construction, shipping, etc. All these are different sectors.
The National Stock Exchange has different sectoral indexes, i.e. it has made different groups of stocks of the same type of sectors. You can check on that.
For example, the pharmaceutical sector is considered to be the safest, so I would rank the stocks of that sector on the basis of their stability, future scope, quality of management, recent announcements from the company, their balance sheet, and quarterly results.
I would rate each stock based on above parameters and prepare are ranking, top-rated stock indicating best bet to buy.
Once we have decided which stock to buy based on the ranking, next question is when to buy?
You don’t want to buy a stock when it is at its highest prices during the day. That will erode some of the profits. Observe the prices of that stock. For beginners, intuition works better.
The next question comes, which how much money should you trade.