At the beginning, everything seems tough, and when you are starting your investment or trading journey in the stock market, you might feel nervous, questioning your decision. But with the right stock market basics course, you can get over this confusion and fear and unlock the potential of the markets.
Most people fear the stock market because they do not know how it exactly works, and there are a lot of myths about the market as well. However, when you start to learn about it, you can understand how interesting it can be.
So, in this article, we will help you understand the basics of the stock market, how it works, its structure, different investment methods you need to know, and most importantly, we will help you understand how you can find the best stock market course.
What Is the Stock Market? What Are Its Functions?
The stock market can be defined as a marketplace where companies issue their shares to raise capital. No business can run without capital, isn’t it, and when a business scales up, it requires a significant amount of capital, which is often not possible for the founders of the business to come up with.
So, they issue the company’s shares to the general public and raise capital against the same. When you buy a share and hold it, you become a part-owner of that company as well. The stock market is the place where all these buying and selling of shares happen.
The functions of the stock market include –
- Raising capital for the companies by public issue of shares
- It helps the investors and traders to take part in the growth of the company/ businesses and earn from the capital appreciation of the shares, or dividends, or both.
- The stock market also helps in understanding the overall condition of any economy, investors’ sentiments, and most importantly, businesses’ performances.
For a beginner in the stock market, it is crucial to understand these functions as they determine how the market works. For this, you must join a stock market basics course for free, which is available online.
Stock Market Participants and the Structure
As you are starting in the stock market for the first time, it is important for you to understand the structure of the market. There are different participants in the market who are part of this structure, and cumulatively run the entire show.
Sebi- The Market Watchdog
At the top of the market, there is SEBI, or Securities and Exchange Board of India, which is the regulator of the entire market. Whatever happens in this market has to be aligned with SEBI’s guidelines and regulations.
If any market participants ditch these guidelines or regulations, SEBI has all the powers and rights to penalize and even cancel their participation in the market.
SEBI primarily works to build the stock market for the better, safeguarding investors’ interests, and promoting investments in the stock market.
Stock Exchanges – The Marketplace
Then comes the stock exchanges, and in India, there are two major stock exchanges, which are –
- National Stock Exchange (NSE)
- Bombay Stock Exchange (BSE)
Undestand the Difference Between NSE and BSE. These exchanges have all the listed stocks in which you can trade or invest. They also facilitate the IPO process before listing of the stock, which one can subscribe to for buying the shares of the companies. Exchanges, apart from taking care of the buying and selling of the shares, help in price discovery by bringing in all the sellers and buyers together, provide transparency in the market, and also align with SEBI to safeguard the investors’ interests. For a detailed understanding of stock exchanges’ functions, you can find a share market learning course, join it, and start learning.
Stock Brokerage Houses – The Intermediators
For buying and selling stocks of any company, you cannot go directly to the stock exchange; you need a stockbroker who offers you a trading platform to buy and sell stocks and other securities. Stock brokerage houses play the role of intermediaries between investors/ traders and stock exchanges against a fee.
Companies – The Capital Raisers
Now, the next participants are the companies that issue their shares to raise capital for their businesses. Firstly, companies launch IPOs in the primary market, and then once the IPO gets subscribed, and shares are allotted, the company gets listed on stock exchange/s, becoming a part of the secondary market where the stocks become available for trading and further investments.
Investors/ Traders – The buyers and sellers
Finally, the most important participants of the stock market are the investors and traders themselves, as they invest capital that the company raises.
Common Investment Methods
Now, as you know how the market is structured, let’s see the common investment methodologies that are suitable for beginners in this market.
- Value Investing: This is one of the most common investment methods where investors invest in such stocks that are trading at a price lower than their intrinsic value, or in simple terms, fair value. As per market equilibrium, all stocks tend to move towards their intrinsic value, and thus, if the stock is underpriced, and you buy and hold it, you may see the price of the stock rising, which can help you reap profits or positive returns.
- Day trading: If you are looking to benefit from the short-term price fluctuations, then intraday or day trading can be an option. In this method, you take a position in a stock and square the position off by the end of the trading session. However, for intraday trading, you need an in-depth understanding of markets, knowledge of the technical analysis and tools, and more. So, if you are more inclined towards trading, then you must join the best stock market course available in the market.
- Growth Investing: This is another long-term investment method where investor pick stocks that are entering or already in their high-growth phase. As the company grows, the share prices grow and vice versa, so the investors can capitalize on the same.
- Income Investing: If you are someone who is inclined towards generating regular income from the market, rather than wealth accumulation, then income investing can be a good option for you. Here, you pick the stocks that offer regular dividends, and these dividends help you have a regular income from your investments.
How To Find the Right Stock Market Basic Course?
To begin your journey in the stock market, you should take up a stock market basics course, and to help you find the best one, here are some tips –
- As you are beginning your journey, look for courses that are specifically designed for beginners in the stock market
- Once you shortlist a few share market free courses, you should read the course content in detail. Check which courses cover all the aspects of the stock market that you need to know as a beginner
- Next, read about the expert or mentor who will be your guide and instructor for the course. Choose instructors with more experience, with industry knowledge, and you can also check the reviews to find the best mentor
- Check the support offered by the team
- Compare the prices of the share market basic course, if they are not free
- And finally, pick the one that suits your goals the best.
Wrapping up
So, now that you have a brief idea about how to learn stock market basics, you can start finding the right stock market basics course with the tips given above. The stock market is not just about theoretical learning; to put perspective, you need to start applying your knowledge. For that, you need to Open A Free Demat Account with a brokerage house and then start monitoring the markets for real, and you can even start your journey with trades of a small amount.