How Do I Start Investing in Stocks? I Am A Beginner and Have No Idea About The Stock Market
How Do I Start Investing in Stocks? I Am A Beginner and Have No Idea About The Stock Market
How Do I Start Investing in Stocks? I Am A Beginner and Have No Idea About The Stock Market
I am a beginner
and have no idea about the stock market.
A common investor can take equity exposure through direct investments into equity or through Equity
Mutual Funds.
When you invest in Mutual Funds, you give the power to a a Fund Manager, who is an expert, to manage
your investments for you. Once invested, the Fund manager would buy and sell stocks on his own volition to
deliver the best returns for his investors. MF managers are experts who have years of experience and
expertise available with them. You are also backed by analysts and technology which helps them in their
decision making on what to buy or sell in the markets. Mutual Fund managers charge a fees to manage your
investments.
Investing in stocks is something that you would need to do on your own. here you would need to rely on
your own judgement on what to do in the markets. Here you would only need to pay brokerage for your
transactions.
its a no brainer that beginners and even people who are not financial experts must invest through mutual
funds rather than trying investments on their own. Countless people have lost tremendous amounts of
money in just trying to save on the Fund Management Charges or trying to be smarter than the Fund
Managers. Its typically what they call a penny wise pound foolish approach.
If you are beginner, then you must also take the support of a Investment Adviser / Wealth manager who can
assist you on finding the right investment strategies for you.
Many good online platforms are now available for investing in Mutual Funds. Look for unbiased advisers an
wealth managers who have consciously chosen to only advise and execute investments through Mutual
Funds. Platforms like ours do not charge any advisory, Transaction or Platform usage fees.
Mutual Funds come in all shapes and sizes. You have options for Conservative, Moderate or Aggressive
Investors. You have different options for short term (less than a year), medium term (13 years) and long
term investments (3+ years). You can even park your money safely for 1 week and get almost double the
returns from your investments. You can start with with Monthly or Lump Sum (one time) investments as
low as Rs 500 and get access to the best Fund managers in the country. Many of the Mutual Funds also
come with ZERO exit loads or Exit loads for 13 months. Mutual Funds have tremendous liquidity. You get
your money back in your account in 13 days post redemption. Considering all these points, MFs are indeed
the best option available to the investors.
First steps.
Have enough money to begin investing. Consider reviewing at least some of the major tenets of
personal finance, such as a multiple-month living expense safety net (rainy day fund) and paying off
high-interest debt, e.g., credit cards, before beginning investing.
Go to Moneychimp -- http://www.moneychimp.com/ -- and Senzu -- https://senzu.io/ -- for
introductions, overview, basics.
Begin to set aside a sufficient amount of money to open a brokerage account (discussed below; note
that most brokers require a minimum opening deposit). Consider $1,000 or more as a minimum
amount to do so. Lesser amounts, e.g., $100, 500, are insufficient to invest effectively. (The entire
initial amount need not necessarily be invested all at once or in one stock. Rather it allows diversity
in stocks, both in types of companies and timing of purchasing stocks.)
Consider investing as a lifelong learning experience.
Consider investing only the money you can afford to lose. Risking monies set aside for other
obligations, such as but not limited to safety net and college funds, is not recommended.
As you study the "how to", be aware of and recognize there are differences in philosophies and
approaches to investing (longer time periods) versus trading (shorter time periods). Definitions may
vary, and the writers'' choice of adjectives may be confusing.
Be aware of and recognize that stocks are just one type of investment product. Other product types
include but are not limited to electronic traded funds (ETFs), mutual funds and bonds; you may
choose to include such products in your holdings.
Second steps.
Third steps:
Fourth steps:
Chose a broker. The cheapest or online-only broker isn't necessarily the best choice, especially for
one starting out. For a number of reasons including face-to-face service and help with forms,
applications and other documents requiring signatures, consider a broker that has a brick-and-mortar
storefront (e.g., in the USA, Fidelity, Schwab, TDAmeritrade, etc.) near you.
There are a number of websites -- exemplified by http://www.stockbrokers.com -- that review
brokerage firms, but consider the timeliness and bias in reading reviews. Competition among brokers
results in brokerage website and mobile app features changing rapidly, as do services and fees.
Rather than accept such writings at face value, consider using such reviews and articles to formulate
your questions to be asked when investigating opening an account.
Consider visiting the broker's office to talk with a representative to talk about their services and
website. Discussion items may include the features and usability of the website from both the
perspective of a beginner and an advanced user, trading fees, research and analyst reports, education,
training, banking services and the like. Are you made to feel comfortable in the office? If not, move
on to a different brokerage firm.
Consider thoroughly exploring the broker's website, with special attention to the research section, to
take full advantage of all that is available before wandering through the myriad of third-party
websites' offerings.
Do take full advantage of the training material, seminars, webinars and discussion forum offered by
the broker of your choosing. Some offices have seminars on site, other brokers offer webinars on
line, and some firms have both.
Have trouble finding an office in your area? Use Google Maps and search for stock brokers or
similar phrases. If that does not help, as telephone books are almost extinct, ask the manager of your
local bank, Better Business Bureau, or chamber of commerce for references.
Fifth steps:
Consider putting as much additional money as you can afford into your brokerage account to buy
more shares. Note that doing so does not necessarily mean one should immediately purchase shares;
opportunities may take time to evolve.
Consider your risk tolerance when doing due diligence on choosing a stock, ETF or other investment
product.
Are you interested in or own shares in a company? Go to the investor relations and/or press relations
page(s) of the corporate website and sign up for the email notifications of interest to you. You should
be among the first to receive notices of SEC filings, product and services announcements, earnings
and dividends.
Recognize the basic differences between fundamental analysis and technical analysis. Both methods
are useful in doing your due diligence; one method to the exclusion of the other is not necessarily the
right course of action.
Investing for the long term? Consider dollar-cost averaging and automatic dividend reinvestment.
Assuming all continues to be well with your choices, don't be in a hurry to sell. Short-term and day-
trading is at best stressful and may well result in loss of principal.
Consider paying attention to rotations in markets sectors and perhaps adjust your holdings
accordingly if necessary.
Be wary of "sure fire" and "guaranteed" investing strategies or methodologies or top stock picks,
especially when it comes to inexpensive penny stocks.
Safety Valves:
Are your confused, frustrated, bored, lack the time, over your head -- whatever the reason -- or just
don't care about or like managing your money, investments, and retirement planning? Find a fee-
based (not commission-based) financial advisor using a phone book, library resources, Better
Business Bureau, or references from your bank. Interview for a good fit.
Have the fee-based financial planner lay out a plan that meets your perceived needs and that you can
follow with minimal stress and fuss.
As you may not pay attention to tax forms, end-of-year statements, and IRA options, you may want
to hire a tax accountant (interview for a good fit) to protect yourself from making mistakes. Be
prepared to show the tax accountant the last few years of your federal and state tax returns. Be
prepared to possibly identify and track unusual business/work or medical expenses.
Footnotes:
Consider taking notes, including questions to be asked in a class, forum or chatroom or of your
broker's customer support, as you advance your knowledge. Paper and pencil works, but a cross-
platform (desktop and mobile) software solution may be a better choice. Obviously there are
numerous organizer and note-taking products -- including a word processor or text edtior -- to choose
from, and flexibility and breadth of capabilities vary. If you opt to try a few products, a hint: ensure
there is a compatible file import and export capability so that notes can be moved to a different
product without rekeying.
I prefer and use the cross-platform Evernote -- https://evernote.com/ -- product for its note-taking,
webpage (e.g., articles, email) and photo capture, tagging and so much more, but that's me. There is a
limited free version; i opted for the full version that has a small (compared to my investments)
annual fee. (These notes were assembled and now maintained in Evernote.)
Most brokers can be broadly divided into two categories; full service brokers and discount brokers.
The basic difference is that discount broker offer you only the trading platform, but a full service
broker offers you other amenities such as training sessions and trading tips.
2.
Submit the application to open your demat account
Many brokers offer a range of plans, choose the one you like and ask them to open an account for
you. Youll be trading in delivery/equities, as that is the most common type of share trading. Most of
the brokers offer you a home visit to collect your documents, which makes it very convenient.
Ensure that you have the important identifying documents with you, such as the PAN card, Aadhar
card, passport or your driving licence. A PAN card is mandatory for opening a demat account.
Some online brokers also offer a paperless account opening, so if you have your phone number
linked to your Aadhar card, youre all set! Youll just have to upload copies of your identity, address,
and income proof along with a verification video, without having to submit any physical documents.
Online brokers do require a power of attorney though, this is required so that they can remove shares
from your demat account when you want to sell them.
Youll also require a trading account to actually trade the shares, but its usually bundled with the
demat account. What more important is that youll need a savings account to store your money. Full
service brokers usually offer you a 3-in-1 account, but you can opt to link your existing savings
account to your demat account.
3.
Brush up on your basics
Share trading is not gambling. Its true that you cant predict where a share will be in the future, but
you can get a very good idea if you study properly. Get a good book or visit any brokerage sites
(For example: Kotak Securities) how to trade in share market section, and youll get a good idea of
the basics.
4.
Start practising
Once the demat account is opened, start monitoring the stocks and the markets. Figure out how to
identify a good company based on its fundamentals and buy their single share. See how the price
fluctuates, and keep reading the news.
Research the companies that are listed on NSE and BSE, and lookout for IPOs. Identify companies
that show strong fundamentals. Check up on them regularly. Also watch the stock charts, and try to
identify patterns in them which will help you to enter and exit the markets at the right time.
Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you
can do it."
-Peter Lynch
The main problem that a person faces while learning about the Stock Market is not the dearth of learning
materials.
The actual problem is that most of the times these resources are not interacting with the person at the same
level that a beginner expects them to be.
They are full of financial jargon that actually makes the learning process boring to the extent that person just
leave the process of learning itself and succumb to the notion that investing is a domain that should be left to
so called "experts".
There seems to be some perverse human characteristic that likes to make easy things difficult.
- Warren Buffett
Investing in Stock Market seems difficult not because of inherent complexities of Stock Market but more
due to financial jargon.
These financial jargon gives an artificial aura of sophistication instead of seeing the things as they are.
You can start by reading some gems like "Intelligent investor(by Benjamin Graham) and "Security
Analysis(by Benjamin Graham and David Dodd)
There are indeed no short cuts however there are ways that can make this journey more enjoyable and
motivate you to learn more.
For this purpose I have started the Stock Market Gamification project that is for making the learning of stock
market fun by using the concepts of Gamification.
It starts from the very basics and using this youll learn things in bite size pieces in an enjoyable way to help
you become comfortable with the real world investing.
I hope that will be helpful... do keep me posted about your progress and feedback.
Happy Learning :)
Being in your shoes some time back, I exactly know how overwhelming it feels when you have so much of
information available. Being said that, I believe that the best way for you to get started is to get started
instead of wasting too much time thinking about the right ways to start.
1. Get a trading and a demat account from a discount broker ( a stockbroker or brokerage firm that
charges a reduced commission on transactions but typically does not provide investment advice or
other services)
2. Watch some videos on basics of stock investing ( there are lots of them out there)
3. Read some investing books if you can (dont do it before opening the accounts as you might end up
waiting to finish the book and not get started, i.e, you gotta start first)
4. Trade as small as you can, and analyze your trades as much as you can, try figuring out what you
could have done better.
5. With time youll start understanding how things are working out, dont stop be hungry to learn,
knowledge is very very important.
Not here to advertise but Ive recently started with Fyers - Your Next-Generation Online Stockbroker . The
company has an amazing platform, great support team, and best in class brokerage charges. What
particularly makes the company stand apart from the competitors is Thematic Investing Concept introduced
by Fyers.
Thematic Investing lets you select readymade portfolios made by experts. Being a beginner, I believe this is
the best way to get your hands on in the stock market.
Bottom line: Dont spend time figuring out the right way to start, get started as soon as you can.
-Sushrut Sadana
Congratulations this thought makes you better than 90% of the world!!!
One year ago I was in your situation and I asked a similar question here. I'll write what you should do in a
sequential order.
Overall-
First you need to understand how market works for that you can zerodha varsity unit 1.
Zerodha Varsity
By the time you complete unit 1 and about to start unit 2 open virtual trading account.
Here you get virtual money to trade in real time, you can learn to trade without using real money.
Learn TECHNICAL ANALYSIS, it can be applied for long term as well as short term trading.
Learn to analyze candle stick pattern, don't relay on indicators only! Indicators read candles to indicate, we
should learn candles because no indicator is 100%true. So learn about patterns like
Continus pattern
Reversal pattern
It's easy some 810 types of candles formation n few patterns is all we need to learn so that when indicators
are bad we can make up for it.
Few patterns like this, if it looks confusing don't worry, you'll learn matter of time.
I trade by using Technical Analysis only, here are some topics you should study
Assumptions in TA
Candle stick
Market cycle theory
Stages in a wave (stock goes up and down i.e wave) each stage will flow previous stage it's cycle and
got 4 stages
Trend
Support and resistance
Indicators
Money management
Risk management
The key to earn more in stock market is by cutting your losses, we are humans we make mistakes, if market
goes against us either book less or low profit Or square off with minimal loss.
Zerodha Varsity
YouTube channels
Trade Academy
Elearnmarkets.com
Technician
Trade Academy is good to start with, watch all videos related to TA by using candles only not indicator.
Then learn how indicators work and how to use them. Finally apply your mind use your knowledge +
indicators to get in get out of market and book profits!
NOTE:- if you buy a share at 500 and sell at 501, you don't make 1rs profit, you'll make 7080 paisa,
understand what taxes&brokrage are applied and for how much money should I sell in order to make profit!
Happy trading!!!
Basic and most important steps before stepping into stock market are:
Always Remember : FIRST LEARN, THEN EARNAlways Use STOP LOSS, if you don't want to
see Your hard earned money turned into ashes.
Remember, Risk can't be eliminated completely in Stock market, although it can be minimized.
Don't trade against trend, remember no matter how good analysis you made, market can defy all
those analysis and go in opposite direction.
Always go with market direction.Don't invest all your funds in one or two stocks, diversify your
investments.
Always invest in Large cap or Mid cap shares. Investing in small cap shares involves high risk.
You can read other things here:Vipul Sharma's answer to How can a novice start investing in the
stock market?
Investing in the stock market is easy. All you need to do is open a Demat account linked to a trading
account.
Trading account Simplified-There are brokers who charge commission, each time you buy and sell stocks.
They will open the trading account for you.
Demat account- There are namely two dipositories in India. CDSL AND NSDL. Your Demat account with
be of either one of them. Each time you buy stocks and hold, your stocks will be on hold in your Demat
account. They will keep the record of your stocks.
Now there are many segments to enter. Preferably you should be dealing with stocks only. Future and
options are another segment. They are just different instruments in the same stock.
For any help regarding account opening, you can message me on whats app. My contact details are there in
my profile description.
P.S. I am conducting a Webinar, where I will teach three trading Strategies along with money
management. You can start trading stocks from next day. You can register for it from my profile
description.
This is a very common question and I have answer it before, you can visit my profile and read answers.
Instead of this I will suggest you that first read atleast something about stock market. You can learn about
stock market by reading and there is a very good platform which is Zerodha Varsity, here you can learn
what is stock market from the beginning. It will give you chapter wise knowledge.
After getting some knowledge about stock market theoretically, I will recommend you to trade in the live
market. Practical is more important with theory. Start trading with 1K and buy/sell in parts, suppose you can
buy/sell 100 shares of a stock with 1K, then buy/sell 50 first and then buy/sell next 50. It will help you not to
lose your money and will give you better understanding of stock price movement.
To practice in live market you need a trading and demat account you can open your account with Zerodha
which is a discount broker and provides good services in very good price. You can read about zerodha from
their Zerodha Website or can read comparison of Zerodha and other broker from my answers.
Open an online trading and demat account with Zerodha and enjoy the lowest brokerage
First you follow any good news channel regularly to understand the stock market. If you want to know
which is the best, i will suggest you follow CNBC Awaaz regularly to watch their Investor Education
Programme, but dont follow their suggestion without knowing the market properly.
Read Business related Newspaper regularly, like Economic Times, Business Standard, Rediff Mint Etc.
Market Indicators(MACD, RSI, Bollinger Band, Simple moving average, Exponential moving
average, Weigh moving average, Parabolic SAR, Super Trend, Stochastics)
Stock P/E
Industry P/E
EPS
ROE
ROCE
Debt to Equity
Dividend Yield
Working Capital
Last but not final i will suggest you, Know the company where you want to invest.
First Educate yourself then Invest, otherwise you only loose money.
As a beginner, the first thing you should do is to get to know the market. You should study about it first and
understand how it works. Here is a good article on how the stock market operates.
Next, here are the steps you need to do to become a stock trader:
Just make sure to do each step religiously. Take your time and youll become profitable in no time.
Best of luck!
First of all I appreciate you that you want to invest in stock market
To invest in market you need demat account and trading account you can open these in your bank and
also from online broker , I suggest you to open online because they provide decent services for tracking
your stock
Now, I am gonna explain you what are demat and trading accounts.
DEMAT ACCOUNT this is same as normal bank account but instead of money your bank balance will
be your shares.
TRADING ACCOUNT- In this you can buy and sell your shares.
Now you have demat account and trading account and you can buy and sell your shares by TRADING
account from DEMAT account.
HAPPY INVESTING.
Before coming to your question I would like to suggest to read my another answer once from here
You need to open trading and demat account firstly. you can open this with any broker company available.
And Bank account details. (Cancelled cheque leaf or bank statement with IFSC and MICR code written on
it).
But you should go for a broker who gives you the best platform and whose brokerage charges are very low.
Zerodha is best broker with lowest brokerage charge. It offers to invest in equity (shares) and mutual
funds absolutely free.
And maximum brokerage Rs. 20 for intraday F&O, currency and commodity investment.
So to invest in stock market first you need to open your trading and demat account.
That you can open from here with the best broker.
After opening your account you will get login credentials for Zerodha kite(available on mobile,desktop and
web). Where marketwatches and charting available. You can trade (buy or sell) easily.
You will get another login credentials for Zerodha Q backoffice management platform where you can
manage your funds. Can withdrawl your funds back to your bank account.
There are quite a few ways you can invest in the stock market. But whichever option you choose, youd
need to have the following three accounts:
Since you must be having a bank account, the easiest way is to check with your bank if they provide these
services. They call it a 3-in-1 account. Many banks like ICICI, SBI, HDFC, Kotak, etc. provide this service.
They are easy to open and the overall operation is smooth. Ive been using ICICIDirect for a long time and
its been a good experience with them so far. These options can however be a bit more expensive than other
options available in the market. So do check and compare before you decide.
If youd rather not go with banks, you can use the services of a broker who can provide offline as well as
online services. Sharekhan, Zerodha, Motilal Oswal, Angel Broking are some of the more popular options
available - although all of them may not offer offline services. There is a lot of information about the rates,
quality of service, etc. that is available on the net. You can spend a few days to select the right one for you.
This however is the simpler part. Selecting the right stocks at the right price is what makes all the difference.
In the last 15 years India grew rapidly and created wealth for those who chose to participate in this wealth
creation opportunity. Some hard numbers: If someone invested just Rs. 100 every month in equities during
this period, (total investment would be Rs 18,000); they would be sitting on over Rs 2 lakhs today.Can Rs.
100 a month yet again create wealth of over 2 lacs over the next 15 years its hard to say. It may be less
and it may be more. But will India continue to grow and continue to provide a wealth creation opportunity
for the foreseeable future Most definitely Yes.
Most individuals dont know how to analyze stocks etc. Fund managers do this and are experts. Mutual funds
is the easiest way for most individuals to become participants in Desh ki Tarrakki
So my recommendation is to go into equity mutual funds - go into Direct plans with growth option
Choose a platform that lets you invest into Direct plans, an RIA (registered with Sebi) for advise. I can
recommend Bharosa Club (i am a co-founder there) - there are others too.
How much is the minimum amount of money
required to invest in the Indian stock market?
There is no limit to the minimum amount of money required to start investing. For eg, stock of a company
called Ballarpur industries is trading at roughly Rs18. So in effect you need 18 rupees here to start investing.
All you need is a demat account, or a broker to buy you the shares.
A word of caution: Please do not buy stocks based on their absolute price like Ballarpur, thinking that its
just 18 bucks. The stock may be worth higher or lower than the current market price (CMP) of Rs 18.
Hence, be careful when investing, do your research and then go ahead with your investment.
Happy Investing!
From market side there is nothing like minimum or maximum amount to invest in share market.
So anyone can start their investments in stock markets by buying atleast one share, of course there are
different shares in markets ranging from below one rupee to more than ten thousand. Hence theoretically its
possible to enter investments in stock markets with a single rupee.
To avoid the losses by lack of experience during initial practices. Start investment with small amounts, then
after better expertise make full sized investment.
At Zerodha, all stock investments are Free & a maximum of Rs. 20 is charged per executed order for
Options, Futures, Commodities & Currencies.
Charges:
Open an online trading & demat account with the best discount broker and enjoy zero brokerage.
To open Account Instantly using Aadhaar, Click here: OPEN ONLINE ACCOUNT
i am tempted to say min is rs 100/- however why someone want to invest in stock market. Purpose is to
invest your surplus in a good asset class.
if idea is to start slow and build portfolio, no amount is small so start asap.
if your worth is 1 crore and you invest only 10000/- in a multibagger it will hardly move the needle.
mame sure your time spent is also proportional to that. For investment of 10000/- you don't want to put it
your day job effort. Make the time invested also count.
Free Book on Art of Stock Investing in PDF ... Google and get it
How can I trade in call options, and put options in
the Indian stock market?
Before you get into the theory of options, the most simple way to understand the underlying concept in
options is that the buyer of options is the guy paying premium to hedge his risk and the person providing the
insurer is the seller of options.
People use this instrument both, to hedge and to speculate. To explain how options work fully is beyond the
scope of my answer. I can provide you links and material to help you learn from them in great detail.
Step 1 -
From a wide variety of available strategies, you can use your outlook on the market primarily your
bullish/bearish stance to filter out the ones that you don't need at the moment.
Step 2 -
Then you can choose number of legs you prefer in your options strategy trade. You can manage your risk
efficiently through this filter. You can choose multiple options too.
Step 3 -
By this function of choosing maximum profit, you're defining what sort of risk you're comfortable with in
the trade.
Step 4 -
An options trade can have unlimited profit and limited loss & vice-versa. You have the facility to choose
this as well. Choose one as by clicking both you'll nullify the effct of the choices.
Step 5 -
Finally, A debit/credit spread can be chosen. Apart from knowing your preferences, you won't need anything
else. See, now we have a strategy that you can use.
Step 6 -
You'll need to enter the underlying values of the scrip, Options Prices as needed according to the strategy.
The graph will show you exactly where you will break-even, make the maximum profit and loss. Also,
there's a table to display the the results for every 1% price movement in the underlying. If you have any
doubts, there's a detailed explanation in every strategy.
At Fyers | Your Next-Generation Online Stockbroker we encourage clients to trade options using a more
sane approach where the target returns are reasonable and achievable without taking risks of going belly-up.
A stock option is a type of option where the underlying asset is a stock. The other type of options defined
based on the underlying are Index options.
Before we discuss stock options in further detail, check information on Call options and Put options. They
payoffs and risk-rewards applicable for stock options shall be the same as any other call option/put option.
Stock Options are a derivative instrument wherein the underlying asset is a corresponding Stock viz. RIL or
SBI or TCS. All stock options have respective lot sizes, different strikes and multiple expiry periods. It is a
derivative like Futures but unlike Futures your profit/loss will not be linear depending on the up move/down
move in corresponding stock. Also we have to keep in mind that not all stocks will have respective options
or futures derivatives, only select few stocks are allowed by SEBI to have derivatives in options and futures.
The Stock Exchange for trading stock options in India is the National Stock Exchange.
Instrument type on the SAMCO online trading platforms OPTSTK. While trading stock options in India,
clients must select the instrument type OPTSTK on either of the SAMCO trading platforms.
Average Notional Contract Value of Stock Options in India Rs. 5,00,000 (Lot sizes are approximated
assuming a notional contract value of Rs. 5 Lakhs)
Margins for trading stock options in India to calculate margins on stock options, refer the SAMCO span
calculator.
Things to remember while trading stock options and building options trading strategies in India
Illiquidity In India, the depth of trading in stock options is still relatively shallow. A lot of stock options are
illiquid with very few contracts traded and low open interest. Traders must bear in mind that the illiquidity of
a stock options contract can severely impact trading strategies and profitability.
Determining fair value of options Due to the wide bid-ask spreads in stock options contract, it may become
difficult for stock options traders to judge the true value and price of an option contract. The bid for a
contract would be Rs. 1 and the ask may be Rs. 8. In such a situation, it can be tricky for a trader to try and
figure out the correct fair price of the option. We would recommend traders to calculate thestock options
price/value on the SAMCO option price calculator.
Avoid Market orders while trading stock options in India. Due to the illiquid nature of contracts, placing
market orders in stock options can be detrimental. It is advisable to trade in stock options only using
theLimit order type.
You can check live stock option prices on the SAMCO Trading platforms.
Brokerage and Transaction Charges The Brokerage applicable on Stocks Options with SAMCO is on a
per order basis irrespective of the number of lots in a particular order. Calculate the brokerage and
transaction expenses for trading stock options at SAMCOs stock options brokerage calculator.
Call Options and put options are financial contracts involving a buyer and a seller.
Call Option
An agreement that gives you right(not obligation) to buy a financial instrument(stock, bond, commodity) at
a specific price within specific time period.
Put Option
An agreement that gives you right(not obligation) to sell a financial instrument(stock, bond, commodity) at a
specific price within specific time period.
Buying call or put options give you limited risk and unlimited profitability.
Let's say I am bullish on Reliance Industries for short term, instead of buying the stock I can buy a call
option for Reliance Industries which will give me a right to buy the stock at a specific price.
ex: Reliance Industries current market price is Rs.927.45, being bullish on the stock I'll buy a call option
with a strike price of Rs.980 which trades at 8.60 and expires on 30th April. If the stock moves up the value
of option will also move up, which can be sold for a profit then.
Similarly if you're bearish on a stock you can buy a put option for the stock which will give you the right to
sell the underlying stock at a specific price within specific time period.
Stock options are priced using different methods, most common of which is Black-Scholes method. While
trading options keep the time factor in mind, value of an option decreases when it's nearing expiry.
I realize that you only want to know the operational aspect of trading options but I would still like to add my
2 cents here. The reason why it is important for me to do so is that even though you think you know how
options work, I have serious doubts about that claim. For one thing, if you really do know how options
work, which is almost half as complicated as rocket science, you should have been able to figure out how to
buy them on your own because buying them is as easy as buying vegetables. So it vexes me to no end that
you were able to understand option pricing and the works but unable to Google how to buy them!
Now that I have explained why I feel compelled to warn you against the perils of derivatives trading, this
brings me to the more important question - why do you want to trade options in the first place? Are you
lured by the false promises of making a overnight fortunes? Or are you enticed by the excitement and
adrenaline rush that comes from making risky gambles? If it is any of these then the stock market is not the
place for you, unless you are playing with money that you are willing to throw away.
Investing should be more like watching paint dry or watching grass grow. If you want excitement, take
your money and go to Las Vegas. - Paul Samuelson, American economist, and the first American to win
the Nobel Memorial Prize in Economic Sciences
If you are looking to grow your hard earned savings, then my suggestion would be to calibrate your
expectations of the returns you can get from the stock market. Develop a whole boatload of patience and
invest in cash stocks - no derivatives, no leverage, just long term investments.
On a final note, I have traded complex derivatives for the better part of my career and I know that money
can be made using them if you understand the intricacies of derivatives pricing, market dynamics, etc. and
above all, are willing to spend long hours working hard on developing trading strategies with your own
sweat, blood and tears! And even after all that, it is not a guarantee that things will go your way too many
professional traders burn out in just a few years trying to stay ahead of the market. So best of luck if you
still decide on going ahead with this - you will definitely need it!
(Disclaimer: I am the co-founder of Tauro Wealth. The views presented here are solely my personal
opinions and are for information purposes only. They are not intended to be investment advice and
independent advice should be sought where appropriate.)
Tauro Wealth is a financial technology company (Tauro Wealth) that is looking to solve the problems faced
by retail investors in India. We hope to provide comprehensive long-term investment solutions at a fraction
of traditional costs.
We believe that retail investors should invest in portfolios based on ideas that they can understand and
created using advanced financial algorithms that ensure that their investments are optimized towards long
term benefits. We never recommend single stock buy/sell ideas or short term, get-quick-rich schemes. We
have recently launched the preview version of our website and are also available on the Google Play Store
(Tauro Wealth - Invest in India - Android Apps on Google Play).
Before you start learning options, start with derivative market basics since when you will be trading in
options, you need the help of futures as well to make option strategies.
After you have developed a little knowledge of derivative market, you can start reading a book.
However, the best way to learn Options is by taking an online course. You can do NSE Academy Certified
Option Strategies to build your understanding on option and various strategies right from the scratch.
When you have formed a base on options strategies, you can gain expertise by practising and building
strategies in elearnoptions.com.
First of all to trade in capital markets, you need a Demat and trading account.
Call Options and put options are financial contracts involving a buyer and a seller.
Call Option- An agreement that gives you right (not obligation) to buy a financial instrument(stock, bond,
commodity) at a specific price within specific time period.
Put Option -An agreement that gives you right(not obligation) to sell a financial instrument(stock, bond,
commodity) at a specific price within specific time period.
Buying call or put options give you limited risk and unlimited profitability.
Say if you are bullish on Infosys for short term, instead of buying the stock you may simply buy a call
option which will give you a right to buy the stock at a specific price.
For example the current market price of Infosys is Rs.927.45, being bullish on the stock I'll buy a call option
with a strike price of Rs.980 which trades at 8.60 and expires on 30th September. If the stock moves up the
value of option will also move up, thus you may sell at a profit.
Similarly if you're bearish on a stock you can buy a put option for the stock which will give you the right to
sell the underlying stock at a specific price within specific time period.
Call and Put options are part of Derivative segment (i.e Futures & Options).
Cash Segment, Futures Segment, Options Segment all are just different ways to participate in Stock market.
First and foremost thing that one needs to know is - Trend/View of a particular stock or Index in which one
intends to take trade.
Once you are clear about the trend/view like Bullish, Bearish or Sideways (Consolidation phase) then you
can decide on to which segment to use for taking position.
There are multiple strategies to play Call and Put options depending on your View or trend analysis.
Lot of Brokerage firms have separate segment for understanding and to analyse various strategies of
Options.
You can also read detailed explanation about Options Trading here,it covers basics as well as discusses how
one can use options to trade with low capital in Indian markets.
A.
TIME PLAY A MAJOR ROLL IN OPTION. FOR EXAMPLE: - I BROUGHT CALL OPTION STOCK
NAME A ON 01.02.2013 i.e. MONDAY AND IF I SELL IT ON NEXT MONDAY i.e. 07.02.2013. MY
PRICE WILL ALSO DIMINISH. EXAMPLE:- PREMIUM WHICH YOU HAD PAID FOR BUYING
THE STOCK A IS TO BE DIVIDE BY NO OF DAYS. SO YOUR PREMIUM IS GOING TO DIMINISH
PER DAY BY THAT XYZ AMOUNT INCLUDING YOUR HOLIDAY ON SATURDAY AND
SUNDAY. ALSO PLEASE NOTE EXPIRY OF OPTION IS ON EVERY LAST THURSDAY OF
MONTH END.
1.
LIQUIDITY MEANS WHERE YOU CAN BUY AND SELL YOUR OPTION CALL/PUT EASILY.
(PREFERABLE WHILE IN OPTION)
2.
ILL LIQUIDITY MEANS BUYER AND SELLER ARE LESS. (NOT PREFERABLE IN OPTION)
ALSO YOU SEE THE PRICE DIFFERENCE BETWEEN THE BUYER AND SELLER. EX:- BUYER IS
@ 99 RS / 1000 LOT & SELLER IS @ 100 RS / 1000 LOT I.E MEANS YOUR IN LOSS OF 1000 RS
ONCE YOU BUY THE CALL OPTION.
NOTE: - CALL/PUT OPTION SHOULD BE SQUARE OFF WITH 5 WORKING DAYS OF MARKET
PERIOD.
IN OPTION YOU BUY CALL:- WHILE YOU PRESUME THAT MARKET WILL GO UP . PUT :- YOU
PRESUME THAT MARKET WILL GO DOWN.
YOU CAN WRITE OFF THE CALL/PUT OPTION, BUT YOU NEED PREMIUM MORE, BUT ONCE
YOU ARE CONFIDENT THAT THE PARTICULAR PRICE IS NOT GOING TO BE BREAK, THEN
YOU CAN ACCUMULATE THE PREMIUM EASILY WITHOUT HAVING ANY PAIN. AS YOU
KNOW THAT THE PREMIUM IS GOING TO BE DIMINISH DAILY BY CERTAIN AMOUNT.
FOR TAKING ANY CALL AND PUT OPTION , USE LOWER TIME FRAME CHART I WOULD SAY
30 DAYS-60 MIN OR 30 DAYS-180 MIN , SO THAT A TARGET CAN BE EASILY DI RIVE AND IT
WILL GIVE YOU YOUR STOP LOSS TARGET ALSO WITH MINIMAL LOSSES. USE RSI 6 &
AVERAGE BAR AS 9.