Trading is the fastest but hardest way to earn money. A lot of people want to earn money from trading but don’t know how and where to start. In this post, we will share the information that you should know when you are going to start trading in India.
Trading looks very exciting when you see someone’s profit but it is very risky for beginners when he/she start trading without knowledge. If you start trading without knowledge it means you are gambling and in the end, you’ll lose your all money.
In this post, we will share information on several topics like how to start trading, types of trading, which app is good for trading, things to avoid in trading, and much more you should know.
- Best Infrastructure Stocks in India 2024
- Best Electric Vehicle (EV) Stocks In India for 2024 – 2025
- Top 5G Stocks in India for Good Returns 2024
What is Trading?
Trading is buying and selling financial instruments to make a profit. There are thousands of financial assets and markets to trade and these are part of shares, Indices, Interest rates, ETSs, Forex (currency), commodities, bonds, IPOs, etc.
In trading, there is huge money as well as risk. If you start trading with knowledge then most probably you’ll make money from the market otherwise you’ll lose the money.
Just by learning technical analysis and price auction, you can not make the money from the market, or if you will make the money then I’m sure you’ll lose the money very soon. Because you should knowledge about money management as well as psychology.
Psychology and money management help a lot to every trader to make a huge profit. Below we will guide to on how to start trading in India.
Types of Trading
There are usually 4 types of trading that are scalping trading, day trading, swing trading, and positional trading. Below is the basic information about each type of trading.
|Trading Type||Timeframe||Holding Time Period|
|Scalping||Short-term||Seconds or Minutes|
|Day Trading||Short-term||1 day|
|Swing Trading||Short-term||Days, Week, Years|
➥ Scalping Trading
In Scalping trading, a trader attempt to make small profits in a few seconds to minutes. In this type of trading, the trader takes a lot of trades in a day to make a small profit from each trade.
In scalping trading, the trader makes a small profit but if the market or stock goes against the trader then it will make a small loss.
➥ Day Trading
Day trading is also known as Intraday trading. In this type of trading, you buy and sell or sell and buy stocks on the same day before the market closes. Day trading/Intraday trading needs very less money for trading as compared to scalping and positional trading. Because a 5X margin facility is available for intraday trading.
While buying or selling stocks in Day trading, if you selected “Intraday” then your order will be automatically squared off 15 minutes before the market closes.
Note: You can hold the positions for the next day but it is strongly recommended to do not to hold positions overnight if you are a beginner.
➥ Swing Trading
Swing Trading is also known as “Short-term trading”. In swing trading, you buy or sell a stock using technical analysis. This type of trading needs a lot of money because there is no margin facility available.
Swing trading is preferred by those people who can not watch the market all the time. Useleflly office going people prefer this type of trading.
Swing trading does not give a profit very quickly, sometimes you have to hold for a few months to book a huge profit.
Note: Always use technical analysis for swing trading, if you buy or sell stocks blindly you may lose money. There are several Swing Trading strategies available on YouTube so check them and backtest before using them.
➥ Positional Trading
Positional trading is also known as a Long term trading. This is very similar to Swing trading but the time to hold the stocks is very high. In positional trading, you need a lot of money and knowledge to trade.
How to Start Trading In India
Above we shared what is trading and the types of trading. Trading is a very big topic and it can not be covered in a single or few posts. Below we mentioned a few things you should learn before you start trading. In short, these things are the roots to start trading in India.
Note: For better understanding, we recommend noting down all topics and searching on YouTube for deep knowledge about each topic.
Recommended: How to Invest in Stock Market for Beginners in India
1. Open Demat Account
You need a broker to trade and invest in stocks. There are a lot of brokers available in the market but a few brokers are good. Almost every popular broker’s charges are very similar because of the competition between them. I recommend the below 2 brokers for trading in stocks.
Note: If you want to know complete or in-depth information about the brokers kindly visit their official website.
Kite by Zerodha
Kite is a very popular broker among all the broker apps. This broker UI is very simple and easy to understand. Kite has all the features you need in a broker app. Below are the brokerage plans of Kite.
Kite annual AMC (account maintenance charge) for individuals is Rs. 300 + 18% GST. Kite also charges rs. 200 – 300 for account opening.
- Equity Delivery: Zero Charge
- Intraday and F&O Trades: Rs. 20 per executed order on intraday (equity, F&O, currency, and commodities)
- Mutual Funds: Zero Charge
Upstox is also a very popular broker in the market. The UI of the app is very awesome and I think it is better than the Kite. This broker also has some unique features to trade in F&O. You can also check the broker mobile app without creating a Demat account. Below are the brokerages of the broker.
- Equity Delivery: Rs. 20 per executed order.
- Intraday and F&O Trades: Rs. 20 per executed order on intraday (equity, F&O, currency, and commodities)
- Mutual Funds: Zero Charge
2. Learn Technical
In trading, a lot of technical words are used and a newbie trader cannot understand them. So, after opening a Demat and trading account I’ll recommend noting down all the words or lines and searching on Google to learn about them.
Different brokers have different order pages to buy or sell any stock. So, do not also forget to check any video or post on how to place an order with the particular broker.
In Technical analysis of any stock everyone prefers TredingView, so please watch any video on how to use TradingView and all its features. It will help you a lot to trade and invest in any stock.
3. Technical Analysis
Technical Analysis is the core of trading as well as investment. You can not make a profit in trading without learning technical analysis. Many people (mostly beginners) say that it is hard but this is wrong. Technical Analysis is easy but it takes some time to be an expert.
Below are some very important parts of the technical analysis. These parts are in sequence so you have to start learning from the first part. We will also share some information about each part of the technical analysis.
1. Candlesticks Basics
Candlesticks are a very basic part of technical analysis. In the chart, several candle forms in a selected time frame. Candles help to predict which candles will be formed next time. There are many types of candles, some candle names are mentioned below.
- Bullish Harami
- Bearish Harami
- Inverse Hammer
- Bullish Engulfing
- Bearish Engulfing
- Piercing Line
- Morning Start
- Evening Star
- and much more…
2. Support and Resistance
Support and Resistance help a lot to trade in the market. With the help of support and resistance, we can know where the market can move. Only support and resistance can not help but it helps a lot in the live market.
Support and resistance are very easy to learn and a lot of content is available on the YouTube channel. There are also some indicators that draw support and resistance automatically.
Support and Resistance are not permanent. Any support can be resistance and any resistance line can be a support line. You need to connect at least 3 points to draw a support or resistance line.
3. Trend Line
The trend Line is also very similar to Support and Resistance. Most of the time market follows some trends and support & resistance. There are many types of trend lines that help a trader to trade in the market.
Traders take a trade when the market or stock breaks any trend line. While trading you need to change the trade line when more candles form or more data comes.
In Trend Line, you need to connect at least 3 or more points to draw a trend line. When a lot of points touch a trend line then the trend line is known as the major trend line. When a major trend line breaks you can see a big move in the particular stock.
4. Chart Patterns
Hope you know that all the stocks and indexes form any pattern in the market that can help us to know whether the stock will go up or down. There is a lot of pattern in the market and you have to remember all the patterns.
Chart Patterns will help to enter and exit a trade. In a chart pattern, you need to draw a trend line and support & resistance to book profit at the right point. Below are the names of a few chart patterns, google them one by one chart pattern and make a note of them.
- Head and Shoulders
- Double Top
- Double Bottom
- Rounding Bottom
- Cup and Handle
- Pennant or Flags
- Ascending Trading
- Descending Triangle
- Symmetrical Triangle
4. Money Management
If you are good at Technical analysis but don’t have knowledge about money management and psychology then I’m very sure you’ll lose your all funds in a few months. Below are a few money management rules you should follow while trading.
1. Fund Risk
All the highly experienced traders highly recommend not risk more than 2% of your total capital in 1 trade. In case, Stop Loss has triggered in 3 trades then your only 6% fund will be a loss.
Keep some money in different bank accounts for trading. In case, if you lose your all money in trading then you can use the amount. I have seen a lot of traders who lose all their money in a week. If you lose your all money in trading it means you are not following money management and psychological rules.
3. Risk per trade
Before starting trading decide the risk of the fund per trade. While deciding risk per trade do not risk more than 2% of your fund in your trading account. If the trade has a high risk then decrease the quantity to save your money.
Just like Money management, psychology is also very important to reduce your losses and increase the ratio of profit. Most beginners do not focus on psychology as a result they losses his all their money even after making a consistent profit. Below are a few points to be psychologically strong.
When the trade goes in the opposite direction, some traders start fearing and as a result, they exit the trade. At the end of the trade becomes profitable. So, in trading, you should avoid fear and focus on learning “price auction” and make your analysis super strong.
When a trade starts giving a good profit and the trader’s target is achieved, still they do not exit the trade because they need some more profit. As a result, they also lose profit. So, it is better to exit when your target is achieved or any negative price auction is formed.
Just like fear, greed can be a reason behind loss or less profit in the trade. So, while learning price auction also focuses on your psychology to save your profit.
When new traders make losses in some trades they become aggressive to turn their losses into profit by taking more trades. In that situation, 99.9% of traders make more losses and after a few weeks or months, they lose their all fund/money.
I’ll recommend you to take a maximum of three trades in a day no matter if all the trades make a loss or profit. After completing 3 trades in a day close your system and do not open the system until the market is closed.
4. Emotional Trading
The traders who are new to the market watch the market all the time. Sometimes they take trades with the thought that the market will move up or down. They do not create any strategy or do any technical analysis.
In Emotional trading, every trader loses his all money in a very short period of time. So, learn technical analysis and follow money management and psychology rules to make consistent profit in the market.
6. Create your Own Trading Setup
Every professional trader creates a trading setup/system using their own knowledge and customizes it from time to time. A trading setup tells you where you should enter a trade and when you should book profit or loss in the trade.
So, learn the market and create your own trading system that may help you to make a consistent profit in the market.
There are many trading setups available on YouTube, if you are a beginner and don’t know which trading setup is good for you then I recommend you to use the Inside bar trading strategy / Inside candle trading strategy.
Rules for using a trading setup-
You should follow the below-mentioned rules before and while using a trading setup.
- Backtest the strategy and note down the win/loss trade ratio.
- Do not change the setup, work only on 1 setup after backtesting and customize the setup to make it better.
- Follow psychology and money management rules on every setup.
There are no minimum money requirements to start trading in India. However, it is recommended to start trading with Rs. 15,000.
It is hard to say because it depends on your knowledge, funds, time, experience, etc. I recommend starting trading in stock with a few quantities if you are a beginner.
Yes, you can. You can also invest rs. 100, the investment money depends on the stock price and the charges.
If you are a beginner and don’t know anything about starting trading in India then this post is only for you. In this post we mentioned everything that you should know before trading, we also mentioned what things you should learn before trading in the market to make some profit. Read the latest articles on business startups, business ideas, making money, trading, and the stock market on moviden.com.