Share Market Basics-How to trade in Stock Market? MDWIX Guide.

How to work in Stock Market & Share Trading with MDWIX.

Stock Market

Share Market Basics-How to trade in Stock Market?

If anyone interested to in investing money in share market, he might be wondering how to trade in the stock exchange. The stock exchange is a place where buyers and sellers of shares meet and agree on a price to exchange their shares. trading in the sock exchange can be a profitable way to grow anyone's wealth, but it also involves some risks and challenges. 

In this articles we will explain the basics & fundamentals of how to trade in the stock exchange including the following frequently ask question(FAQ). 

What are shares and why do people trade them?

How to Open a trading account and choose broker?

How to research and analyze the market and the companies?

How to place orders and execute trades?

How to manage portfolio and monitor the performance?

What are shares and why do people trade them?

Shares also known as stocks or equities, are units of ownership in a company. When anyone buy a share, he becomes a shareholder of that company. Subsequently he has some rights and responsibilities, such as voting on important decisions, receiving dividends(if any), and participating in the profits or losses of the company.

People trade shares for various reason as following:

• To earn income from dividends or capital gains (The difference between the buying  and selling price of a share).
• To diverse their assets and reduce their risk exposure
• To speculate on the future movement of the share prices. 
• To hedge against other investments or liabilities.

How to open a trading account and choose a broker?

To trade in the stock exchange, you need open a trading account with a broker. A broker is an intermediary who facilitates your transaction in the market. There are different types of brokers as follows:

• Full-service brokers: They offer a wide range of services such as advices, research, portfolio management and tax planning.

• Discount Brokers: They offer basic services, such as executing orders, and providing online platforms. They charge lower fees and commissions, but they may have limited customers support and security features.

• Online Brokers: They are similar to discount brokers, but they operate entirely online. They offer fast and convenient access to the market, but they have limited customer support and security features. 

You should choose a broker that suits your needs, preferences, budget and level of experience. You should also check the broker's reputation, regulation, fees, service, platform and customer support before opening an account.

How to research and analyze the market and the companies?

Before you start trading in the stock exchange, you should do some research and analysis on the market and the companies you are interested in. This article will help you make informed and rational decision based on facts and data, rather than emotions or impulses.

There are two main methods of analysis: Fundamental analysis and technical analysis.

Fundamental analysis: It is the study of the intrinsic value of a company based on it's financial growth potential, competitive advantage, industry outlook, etc. Fundamental analysts use various tools and indication such as, financial statement, ratio, earnings, dividends and growth rates.

Technical analysis: It is the study of price movements and patterns of a share based on historical data. It uses various tools and indication such as charts, Trends, Support and resistance level, moving averages, Oscillators and volume.

Both methods have their advantages and disadvantages. Fundamental analysis can help you identify under valued  or over valued shares based on their intrinsic value. Technical analysis can help you to identify entry and exit points based on price signal. You can use both methods together or separately depending on the trading style and strategy.

How to place orders and execute trade?

Once you have done your research and analysis, you are ready to place your orders and execute your trades. An order is an instruction to buy or sell a certain number od shares at a certain price or condition. there are different types of orders. There are different types of orders such as follows:  

• Market orders: It is an order to buy or sell a share at a current market price. It is executed immediately and has no guarantee of price.
• Limit orders: It is an order to buy or sell a share at a specified price or better.
• Stop orders: It is an order to buy or sell a share beyond a market prices.
• Stop-Limit-order: it is an order beyond the stop order.

How to manage your portfolio and monitor performance?

After you have executed your trades, you should manage your portfolio and monitor your performance. A portfolio is a collection of all share and other investments. You should manage your portfolio according to your goals, risk tolerances, time horizon and diversification. You should also monitor your performance by measuring your returns, risks and costs.

Some of the tools and indicators you can use to measure and manage your portfolio and monitor your performance. These are as follows:

Portfolio tracker: It shows the current value, change and performance of your portfolio over time.

Profit and loss statement: It shows the net income or loss of your portfolio over a given period of time.

Risk reward ratio: It shows the ratio between potential profit and loss  of your portfolio or trade.

Sharpe Ratio: It shows the excess return per unit of risk of your portfolio or trade.

Beta: It shows the sensitivity or correlation of your portfolio or share to the market movements.

Alpha: It shows the excess  return or value added by your portfolio or share over the market return.

Fees and commission: They show the charges levied by the broker or platform for executing your trade.

You should review your portfolio and performance regularly and make adjustment as needed. you should also learn from your mistakes and success and improve your trading skills and knowledge.

Conclusion: Trading in the stock exchange can be a rewarding way to invest your money, but it also requires some preparation, research, analysis, discipline and patience. by following the basics explained in this article, anyone can start trading in the stock exchange with confidence and competence. 

Further any clarification feel free to place your valued comment and email to ceo@mdwix.org

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