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Do groundwork before taking a plunge into stock markets

Taking a plunge into stock markets is never easy. While there’s help at hand, it is always better to do some groundwork so that you remain abreast of the latest developments. Here is a pocket guide on how to get started.

TAKING your first step in an uncharted territory is never easy. So be it entering a new city, college life, or for the matter, your first job, everybody goes through those initial jitters. Dalal Street is no different place. You research, ask people familiar with the dynamics of the market to guide you, but finally it’s your own gut feel and learning that help you take smart decisions. Also, how well you prepare for taking the first plunge into the stock markets is important. Here’re seven ways in which you can teach yourself how to invest in stocks.

START HERE

You can find many beginners’ guide at your nearest book stall. Make sure that the investment book you buy is by a renowned writer or an investment guru. If you don’t want to read heavy stuff and at the same time understand the dynamics, books by investment gurus like Warren Buffet are really helpful. Not only they will clear your notions about investing but also inculcate long-term investment habits, an expert at financial planning and director of Transcend Consulting.

Alternatively, you can consult the research team of a brokerage house where you have opened your account on which book to buy. These books generally cover terminologies which are essential for interaction with your advisor/ broker.

ONLINE TUTORIALS

Another way to learn the ABC of trading in the capital markets is online tutorials offered by e-brokerages. It is a smart way to start dabbling in stocks. Whatever said and done, theories are still handy. The best part about online tutorials is that they save you a lot of time which would have been otherwise spent searching for a book which relates theories with practical.

CRASH COURSE

If you are a serious investor, analysts recommend that you must go for a stock exchange’s certificate course in stock markets. Currently, there are a number of institutes offering such courses. It will help you understand the processes better, although they are primarily meant for entry-level professionals. In fact, you can also opt for diploma courses, if it excites you as a career.

INVESTOR SEMINARS

For starters, attending investor seminars and research events, which are often offered free by reputed investment houses and media companies, is a good way to learn how the bulls and bears play in the stock market. Webcast, events, online seminars, chats and SMS alerts are the other medium through which you can find answers to your queries. You should, however, be cautious about the promises made by certain unheard of entities.

INFORMATION CAPSULE

According to analysts, a daily dose of media, including business newspapers and TV channels, can be a good means to update your knowledge. But a beginner should bear in mind that it doesn’t mean he needs to alter his portfolio on the basis of news flows. Such an action should be only taken after consulting your financial advisor as the trends/ cycles change at a rapid pace, and can leave you in a limbo.

TRACK A FEW COMPANIES

Another way you can learn the tricks of the trade is by following the track of stock prices of select companies. You should initially pick two-three companies that you feel are good investment bets and track the stock prices on a regular basis. Follow company announcements, read quarterly results, check business news and see how they impact the stock prices on daily basis. If a company’s stock price shows sharp movement, try to find out what was the reason behind this sudden fluctuation.

MONEY GAMES

For net savvy investors, analysts believe it is important to get acquainted to the screen. So, you can try various money games related to stock markets in the virtual world before entering the real play. A better way is to switch to online simulators and limited period trial accounts to build confidence before you start making actual investment. If you are not in the above group, a few visits to your broker’s office to understand the nuances from your relationship manager and observe trading before you start transacting are highly recommended.

THE AFTERMATH

You may go steady through the above steps, but the actual game begins once you take the plunge. You should monitor, recommend analysts, your investments through tools ranging from online portfolio tracker to simple Excel files which will not only tell you about the mark to market profit/ losses but also update you on your investment value based on industry and stocks classification. There are lots of advance technical tools available at nominal costs which show relative performances of portfolio and generate technical signal for rebalancing. Starters may, however, switch to such systems at a later stage in investing.

The debate may rage on — whether successful investing is an art or science. But what you should understand is that discipline is a must while starting your journey and avoid shortcuts.

It is said that everyone knows the path, but very few actually walk it.

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