Previously we talked of the process involved in opening a CDS account and getting set for your investment adventure at the NSE. In this continued series, we are going to make our first trading very easy; just like bread and butter.
Once you are through with the small process of opening your CDS account, its time now to see your money working for you and not you working for the money. So, whom do you give your hard earned and saved money to and where, for investing purposes?
The money you have in your hands is worthless until it starts working for you. To begin the process of having your money work for you; you`ve got to give it up to the professionals to do the investing for you. Central Depository Agents (CDAs) that is; investment banks, stockbrokerage firms and custodian banks, are all there to help in easy handling of your money. Apart from helping you in opening of the CDS account, they also take your deposits and assist in the actual money transfer when transactions take place.
After depositing your money with your CDA, you then continue monitoring the movement of share prices in the stock market. You then start to make buy and sell decisions based on your own opinion, and backed by the advice you get from your stockbroker.
Some investors decide to leave all the responsibility of making the buy and sell decisions to their stockbrokers. That has the advantage of giving you peace of mind; but may be costly if the stockbroker just makes many such decisions just to increase their revenue from the many transactions, without considering the value of their decisions to you the investor.
Even if you were not to get involved in the actual day to day monitoring of share prices – leave that to your stockbroker for now – you could be getting weekly updates of which stocks you have invested in and how they are doing. Let your stockbroker consult you when making any investment decision, but don’t be too hard on them – remember they are the professionals!
For long term investors, the critical decision is made before buying your first stock. This follows the fact that when you buy a given stock, you are buying it to hold it for a long time and gain from capital appreciation. You then need the help of your stockbroker or investment banker in choosing a company with strong fundamentals that will pay-off satisfactorily in the long-run. Once you`ve bought the shares in that strong company, you then relax and watch as time pass by till the future selling time comes.
For short-term investors, when you get the grip of how share prices move in the stock markets, you will be able to speculate with a high degree of success on how the shares will move in the future. This then makes you a better share trader each and every day you participate in buying and selling of shares. Learning the trends taken by specific shares will be of great help to you when making those buy-sell decisions; be sure you have them with you always.
As a short-term share trader, you need to be conversant with what causes share price fluctuations from time to time. This is what will help you in knowing when to buy or when to sell and make a good killing. For that and much more, check out the next article on this series of getting started at the NSE…chaos!!!