How to start Investing / Trading in Stock Market Wisely? Complete Guide

Investing refers to the act of utilizing money to get return on it. Simply means using your money to earn more money. Investing in stock market may give you higher returns if you invest wisely. So let’s understand about the stock market investment and stock trading.

How to start Investing in share market

How to invest in stock market?

To get started in the share market India, first thing is to open a trading account and DEMAT account through a broker. Here is the updated list to choose the best stock broker .

After opening the account and linking it your bank account. Its time to invest by buying shares or creating a portfolio of shares. The first question that come to the new investors’ mind is that which share to buy? What to buy? or where to find the companies to invest in the share market?

Understand the type of investment

Investing in stocks is a way to make passive income. A person can invest their money in a company, and as long as the company doesn’t go bankrupt, they will get back the money they invested with capital appreciation plus a percentage of the profits at regular intervals. So, actually, it is a type of saving instrument for some people.

But some people get actively involved in the market to get a better return than passive income. Some people even use this as their main source of income. But for this, a person requires a deep knowledge and understanding of the stock market.

Let’s find out the difference between active and passive investment.

Passive Investing

  • No or very little time required
  • Long term prospective
  • Regular dividend income and bonuses
  • less risk with less return.
  • generate passive income
  • Stocks, mutual funds, bonds, and ETFs are suitable products for investors.

Active Investing

  • Require a lot of time
  • Need time to do research
  • short-term perspective
  • High risk, high reward
  • stocks and derivatives are suitable products for traders.

After deciding on the type of investment, the next step is to choose the right investment product.

Choose the right investment product.

There are many different types of investments that you can make in the share market. These include shares, bonds, mutual funds and exchange-traded funds (ETFs). Shares or stocks are one of the most popular investment options. They give investors direct ownership in the company or business that they have invested in.

1. Stocks / Equity

In investing, stocks are a type of security that represents ownership in a publicly-traded company. Stocks are some times also referred as Equity or cash market. Investing in stocks is advantageous because it can potentially generate higher returns than other investments. It is also more liquid than other investments because stock prices fluctuate frequently.

On the other hand, investing in stocks can be disadvantageous because it carries a higher risk profile and there may be periods of time when the market value of your shares goes down instead of up.


  • increased profit margins.
  • Ability to diversify holdings
  • Potential for growth over time


  • The risk that the company will go bankrupt and all your investments will be lost

All stocks list in India

2. Bonds

A bond is a debt security that is issued by an organization to borrow money from investors. Investors purchase the bonds in the hope that the company will repay their investment with interest. Bonds can be issued by governments, corporations, and municipalities. The interest rate of the bonds is usually fixed and paid at regular intervals, such as monthly or semi-annually.


Bonds offer a steady income stream for investors, which can be used to provide funds for other investments or as a source of retirement income because they are often backed by government entities like municipal water companies or state governments.

Bonds offer lower risk than stocks and provide a steady income for investors over time.


The main disadvantage of bonds is that they offer lower returns than stocks.

It’s ideal for passive investment.

3. Mutual Funds

Mutual funds are a type of investment that pools money from many investors and invests it in stocks, bonds, or other assets. Investors can choose to invest small amounts into the fund on a regular basis (e.g., monthly) or make lump-sum investments.


Mutual funds offer many advantages, such as:

–  diversification and professional management, which can provide investors with better returns than if they invested on their own.

– Less risk


However, there are also disadvantages, such as:

-fees and commissions, which may eat into your investment returns over time.

– investor doesn’t have control over the asset allocation, This means that the investor can’t decide how much should be invested in stocks or bonds. The fund manager decides this instead.

4. ETFs:

Exchange-traded funds are a type of investment that is available to investors on the stock market. They are usually a collection of stocks, bonds or other assets which are pooled and then sold to investors. An ETF is an investment fund that owns the underlying assets and divides ownership of those assets into shares. The price per share will change throughout the day as the value changes.


– ETFs are less expensive than mutual funds and index funds because they require less active management.

– ETFs can be bought and sold on exchanges, like stocks.

– They are generally more tax efficient than mutual funds and index funds.

– They offer greater transparency because they are required to publish their holdings daily.


– The liquidity of ETFs may not be as high as other investment vehicles, such as stocks or mutual funds, which can lead to higher transaction costs and lower returns for investors who need to sell their shares quickly.

5. Derivatives (Futures & Options)

The primary purpose of the derivatives is to hedge the funds. Actually they drive its price from its underlying asset. Futures and options are two popular derivatives. They could be either a stock derivatives like Reliance or Index derivative like Nifty 50.

The Future Contract is a contract to buy or sell an asset at a specific price (the strike) on a predetermined date (the expiration). Option contract is also the same but it give right to buyer but not the obligation. This is the main difference between a future and an option contract.

Only the selected securities are allowed for the future & option contacts. Check the derivatives list here.

Choose your style of investing

There are different types of investors in the share market. Some of them invest using a buy-and-hold strategy, while others employ more risky strategies such as day trading. It is important to understand the type of investor you are before you start investing. You should know how much risk you are willing to take, what your investment goals are, and what type of portfolio suits your needs. For beginners, it is important to know the type of investor.

We have categorized 3 types of investors according to below trading strategies.

1) Intra day trading

Day traders are people who buy and sell securities, such as stocks, on the same trading day. Day trading is different from long-term investing. Day traders can make a lot of money in a day if they are successful. But the disadvantage of day trading is that it is not for everyone. It takes time, patience, and discipline to be a successful day trader. It requires constant attention and effort. Day traders must be prepared to lose money at any point during the course of their trades, which can lead to serious financial consequences if they don’t know how to properly manage their funds.

2) Swing Trading

These investors focus on making quick profits by trading shares that have short-term price volatility. Swing trading is a style of trading where the trader buys at the end of a downtrend and sells at the beginning of an uptrend. This type of trading could be more risky or more rewarding than day trading.

2) Long-term investing

These investors buy shares in companies they believe can generate long-term growth and hold them for years or decades. The advantages of long term investing are that it offers diversification, reduces the risk of a sudden downturn in the market, and provides tax benefits. The disadvantages are that it can be difficult to find the right stocks to invest in, there is no guarantee that you will make money, and it takes a lot of time and patience.

How to find the companies to invest?

Choosing the right stocks to buy is not an easy task. You have to do your research and look at the fundamentals of the company. There are many factors that you need to take into consideration before investing in a stock. Fundamental and technical analysis are two types of analysis that investors do. Long-term investors rely on fundamental analysis, whereas traders rely on technical analysis.

Choose how you want to do the research and analysis work to make your decision.

Doing your own research

A lot of factors need to be considered by a share market investor before making an investment decision. One of the most important things that a potential investor needs to do is doing his own research on the company and the industry.

Investors can use different sources of information for researching about a company like the company website, annual reports, press releases, analysts’ reports and so on. It is also important for investors to take into account all the recent trends in the industry as well as any changes in management or ownership in order to make sure that they are not investing in a bad stock.

Find companies market cap wise

Market cap is the total value of a company’s outstanding shares. Market cap is calculated by multiplying the price of a stock by the number of outstanding shares. This gives an indication of how much a company is worth. In stock market companies are categorized as Small cap, Mid cap and Large cap companies.

Recent announcements by the companies

Find the companies industry wise

Market Capitalization wise companies

Professional Stock Advisers

Stock advisers help people invest in stocks by providing advice and tips on what stocks to buy. They are a great way for beginners to get involved in the stock market. There are many companies or individuals who provide this research and give recommendations on when to buy or sell. However, keep in mind that they are only experts and cannot forecast the market.

There are many different types of stock advisers. Some of them specialize in a certain type of investment, such as blue-chip stocks or penny stocks. Other advisers focus on specific sectors, such as technology, healthcare, etc.

A stock adviser’s main responsibility is to make recommendations to clients on what stocks they should buy or sell. A stock adviser also has to keep up with financial news in order to be able to give accurate predictions about how a certain stock will perform in the future.

It is advisable to be careful when you are dealing with a stock adviser. You should understand their background and see if they have any previous experience in the field before you let them handle your money.

Robo stock advisers

These days, in the age of artificial intelligence, many companies provide robo-advisories. In the last few years, there has been a significant change in the way people invest their money. The advent of new technologies such as artificial intelligence and machine learning has led to the development of more efficient ways for investors to make decisions about where to invest their money.

Robo stock advisers are software programs that use algorithms and other methods to predict how stocks will perform. These programs can be used by individuals or by investment firms like hedge funds. Robo-advisers are computer programs that create and execute trading strategies based on algorithms.

Robo-advisers are a form of automated investing. They are designed to provide the same level of investment advice as human advisers, but with greater speed, lower cost, and less emotional involvement.

Don’t trust unknown advisers.

When it comes to investing, you need to be careful. There are a lot of scams out there and many ways to lose money. If you’re just starting out and want some advice on how to choose the right companies to invest in, this article is for you.

The use of SMS, email, and WhatsApp groups to advise people to invest in the stock market is a growing trend. This can be seen as an easy way for people to invest in stocks without having to go through the hassle of understanding how the market works.

Most of these advisers are just looking to make a quick buck, but they can be very persuasive when they want to be. So, before you take any of their advice, make sure that you know exactly what it is that they are advising you to do.

Choose the right investing strategies

Investors invest their savings in the share market to earn passive incomes, so they give only a little amount of time to the market. But some people work full time to make it their main source of income. So there are lots of strategies people use to earn money in the market.

There are many types of investors in the share market. They all have different investing strategies. For example, some investors may prefer to invest in shares that are low priced and have a high potential for growth, while others may prefer shares that are expensive but stable.

Trading or investing strategies are the set of rules that a trader follows when buying or selling stocks. There are many different types of trading strategies, including day trading, weekly trading, monthly trading, and short-term trading.

How much do you want to invest?

The stock market is a risky investment. It is not for everyone. You need to be willing to take risks and be able to afford losses if you want to invest in the stock market.

Money does not come easily. So, you should only invest what you can afford to lose. But with the right strategy and patience, you can get a better return than any other saving scheme.

If you want to learn first before risking your real money then use the Stock market simulators.

Tips and points to consider before investing in share market

Things you should remember before investing in share market

  • Create diversified portfolio.
  • Set your investment budget.
  • Choose the rights type of stocks or security.
  • Be prepared for market crash
  • Invest only surplus funds
  • Don’t time the market
  • take informed decision
  • Try a simulator before investing real money


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