How to Start Trading in India: A Beginner’s Guide

Trading is becoming a lucrative way for many to make money in the stock market. However, starting to trade in India can be challenging for anyone unfamiliar with trading instruments, strategies, tools, and platforms. In this blog, we will discuss how to start trading in India for beginners, along with some helpful tips. So let’s get started!

What is Trading?

Trading is a simple term for buying and selling financial instruments such as stocks, bonds, commodities, contracts, and currencies for a short to medium span to capture the market movements and earn profits. Individuals involved in trading financial instruments are known as traders. 

The idea behind trading is that the prices of stocks and financial securities usually fluctuate based on supply and demand forces, macroeconomic factors, country-specific and global market conditions, and other factors. Traders capitalize on these movements to make profits.

Steps to Start Trading in India for Beginners

Here is the step-by-step process anyone can follow to start trading in India

1) Choose a Broker 

To initiate online trading, the first step is to select an online broking platform. There are many new-age as well as traditional broking platforms that offer trading through online demat and trading accounts. 

While selecting a broker, research available options and choose a broker that offers a secure, advanced, and easy-to-navigate platform with a competitive brokerage structure. Browse through features, products offered, support services, and technical quality through online resources and reviews. 

You can also consider Rupeezy which offers a simple and user-friendly app for all your trading needs.

With Rupeezy, you can trade in stocks, commodities, and derivatives with advanced features and transparent, competitive pricing.

2) Open a Demat and Trading Account

A Demat account is mandatory to trade in securities. A demat is an online account that holds stocks and other securities. You can view your demat holdings online and keep track of your transactions through online access. 

Along with demat you also need to open a trading account which helps you buy, sell, or transfer securities in your demat. A demat and trading account is opened together usually by completing a simple KYC and personal details verification. 

PAN Card, Proof of Identity, Proof of Address, and Bank details are some of the basic documents required to open a Demat. 

You can open a demat and trading account online with Rupeezy within a few minutes by following the steps below:

• Download the Rupeezy trading app from your Play Store, 

• Add your details such as DOB, email, PAN, etc.

• Upload KYC documents such as Aadhaar, PAN copy

• Add your bank details such as bank name, account number, IFSC code

• Upload your photograph

• Complete the verification process by keying in OTP 

• Once KYC is approved, your account is active to trade

3) Log in to Your Account

Upon account opening, you will receive a Login ID and Password. Using your credentials, log in to your account and transfer funds through the linked bank account using Netbanking or UPI. The fund transfer process is simple and funds are available instantaneously. 

To transfer funds, go to the ‘Menu’ tab, click on ‘Add Funds’ Enter the Amount, and Pay Using UPI or Net Banking.

4) Browse, Research, and Trade

Once you have your trading account ready, you can browse through various securities, and stocks details such as financial and fundamental data, explore interfaces to place buy/sell orders, and check live market data. You can conduct your assessment using charts and tools for technical analysis, and analyse the company’s business with financial data, ratios, company news, annual reports, etc. 

Once you identify stocks, you can add them to your watchlist, create theme-based baskets, and place orders. You can create trading strategies using tools or start with lower-risk blue chip stocks, trade with a small amount, and gradually build as you gain experience. The objective of trading or investing is to understand your goal, know your risk appetite, and aim to make a profit while minimising risk. 

5) Leverage Platform Tools

There are many advanced tools that online platforms offer. For example, Rupeezy offers free trading tools you can learn and benefit from, such as market orders, limit orders, basket orders, GTT, OCO orders, Advanced option chains, trade from charts, etc. 

To know what benefits these orders offer, Check out our blog on the types of orders in the stock market

6) Analyze Chart Patterns

Invest time in learning chart patterns Such as the Head and Shoulders pattern, indicating a reversal of a trend, Triangles that act as continuation patterns, and Double Tops/Bottoms, which are reversal signals. Once acquainted with, these can be applied to recognize profitable trade opportunities during different market conditions.

To learn how these reversal patterns work, check out our blog on Reversal Candlestick Patterns

7) Understand Volatility

Get comfortable with volatility. It is a relatively rapid movement in stock prices. Use Bollinger Bands, amongst other indications, which demonstrates if prices are going to be overbought or oversold. Use the VIX or Volatility Index to understand the risks and opportunities based on market volatility.

8) Understand the Support and Resistance Levels

Learn to identify the location of support (price floor) and resistance levels (price ceiling) on a stock chart. Most regularly, support and resistance levels help indicate the change in trends which can be either a breakout(Price moving above resistance) or a reversal (Price falling back below support)

9) Choosing a Trading Style

Choose a trading style. Most beginners start with swing trading, involving holding positions for a few days up to several weeks. Learn strategies like breakout trading which entails entering trades when prices break resistance levels and momentum trading which follows stocks with a strong upward or downward movement.

Tips to Start Trading as a Beginner

Understand Market Hours and Timing:

The Indian stock markets are open from 9.15 AM to 3.30 PM from Monday to Friday. The pre-market session is open from 9 AM to 9.15 AM for placing orders.

Research your Wishlist Thoroughly:

Investors should compile a few stocks in a wishlist according to their preference and research these stocks in depth by knowing about the news such as quarterly results, events, mergers, etc. Along with that, technical analysis is also important as it involves studying the charts and finding resistance and support levels to know about the price movements.

Use Resistance and Support:

Using Resistance and support is the basic tool to predict the price movements of the stocks in the short term. The prices often go upward and come downward at a particular duration in certain market conditions, thus the highest prices during this period are assumed as the resistance, likewise, the lowest will be assumed as the support.

Set Profit Target and Stop Loss 

Determine profit target and stop loss levels while planning how much profit you want to make from the trades and how much you consider losing at specific levels. Example: you buy at 100, set the profit target at Rs.110 and the stop loss at Rs.98.

Use Intraday Trading Indicators:

Indicators such as the Moving Average, Relative Strength Index, and Bollinger Bands provide traders with a holistic view of analysing short-term stock fluctuations. Understanding these is one of the basic trading tips for beginners.

Keep Track of News and Events: 

Update on company earnings, economic reports, or worldwide happenings that may impact the stock price. Set up news alerts or track authentic sources for instant updates, as this can help you predict stock price movements.

Keep Track of Liquid Stocks: 

Trade in highly liquid stocks as they offer easy buying/selling without causing a drastic impact on the stock price; therefore, they can be traded seamlessly. For example Reliance Industries, Tata Consultancy Services (TCS), and HDFC Bank

Money Management: 

Follow strict money management rules. Only risk up to 1-2% of your capital on any single trade. Further, stop-losses should be set to keep possible losses in check and avoid emotional trading. If you want to manage your money effectively, preserving capital is more important than high returns.

How to Start Trading with No Money

You can practice trading without investment with the help of paper or simulation trading. Paper trading or simulation trading is a method of simulating trading activity by buying unreal financial instruments without using real money. There are several ways to start trading with no initial investment. You could use a trading simulator or demo account, offered by many apps, where you can practice with fake money. 

However, it's important to remember that while it is possible to start with little or no investment. You would have to invest real money if you want to see returns from trading. It's crucial to understand the risks and market dynamics before getting started.

If you have a small capital and want to start trading in the stock market you can use Margin trading which allows you to trade in stocks with a fraction of money from your side, and the broker funds the remaining amount. With margin trading, traders can increase their return potential even if they do not have a large upfront corpus. 

If you want to know more about margins, check out our blog on “Types of Margin” to understand it better.

Benefits of Stock Trading

• Profiting from Market Volatility: Traders can use short-term price movements as a benefit. Rapid price fluctuations triggered by news, and macroeconomic events can provide a great opportunity to buy or sell stocks to make a significant profit compared to long-term investments.

• Leverage: Traders can use margin trading to buy more stock than they can afford with their own money. This means that you can now control a greater position with less capital. Again, this ability to increase return potential also has a probability of losses.

• Trend Agnostic: Short-selling strategies allow you to take profits in both rising and falling markets. You don't have to bank on the long-term growth of the market since you can realise profits in the price downtrend.

• Liquidity: The shares are traded on major exchanges such as NSE and BSE. You can readily buy or sell your shares at the market price and within an extremely short time. High liquidity, therefore assures you of having access to your money when you need it.

• Flexibility: You can invest in stock trading in line with your financial objectives. Be it speculation through short-term trading to take advantage of market fluctuations, or having a long-term investment strategy to accomplish growth, flexibility in strategies and the sum of investment allows that.

Risks to Consider 

• Market Risk: The risk of stock prices fluctuating upward or downward because of changes either in the market or the economy. These are those that could result in losses if the market moves in reverse to your investments. Be prepared for ups and downs; have strategies to diminish risks.

• Liquidity risk: An illiquid stock might not sell regularly, and buying or selling the same on short notice might be hard. You might have to bear higher costs or even losses in case you need to undertake urgent trading.

• Emotional Risk: Trading can be a very stressful activity, and emotions often tend to colour the decision-making process. It always helps to keep calm and follow the trading plan consistently to avoid any mistakes.

• Leveraged risk: Leverage or margin trading amplifies gains through trading with borrowed money. At the same time, it amplifies losses. One might lose more than they have invested in case something goes wrong.

• Operational risk: Technical failure or erroneous entry affects trading. These risks can be minimised if you use a dependable trading platform and always have backup plans.

Conclusion

Wrapping it up, you can start trading in India by selecting an appropriate broker, opening a trading account, and understanding market dynamics. You must learn market trends and formulate a trading strategy that best suits your risk tolerance and investment objectives. Keep yourself updated with market news and rework your trades from time to time to develop your skills. Trading is very rewarding if correctly planned and executed with discipline.

Have seamless trading in Rupeezy, your trusted friend in the stock market. Open an account with them today and start trading.

FAQs:

Q1. Is stock trading safe for beginners?

Yes, stock trading is safe for beginners, you can start your trading journey by learning the basics of trading, strategies, and managing risks. Stock investing and trading are tools to build wealth with the right tools and knowledge.

Q2. How to start trading without investment?

You can practice and learn trading with simulation trading accounts where no money is needed and there is no real trade. Also, you can start trading with very little investment by trading in less risky blue chip stocks. 

Q3. Which trading is best for beginners?

Beginners can start stock trading by learning and using simple strategies such as swing trading, day trading, position trading, etc. before exploring more advanced strategies. 

Q4. How much money do I need to start day trading?

There is no minimum investment amount to start trading in India as the stocks are priced from as low as Rs.1 to Rs. 10,000 or even more. However, to gain trading experience, you can start with Rs. 5,000 to Rs.10,000. 

Q5. What are the strategies for stock trading?

There are many strategies traders use e.g. momentum trading, reversal trading, scalping, price action trading, swing trading, etc.