How to conquer stock trading

Every student would have heard of people talking about making money
through the stock market or with cryptocurrency. However, one look at stock
trend graphs and we feel a little out of our depth.
This article is made with the intent to make the entire conundrum behind what
stocks are, how to invest in them, and how to make money with them easier
and clear.
Let’s begin!
What are stocks anyway?
To make it as simple as humanly possible, stocks or shares are ownership
indicators of a company. If you own 100 shares of a company XYZ that has a
million stocks in the market, that means you own 0.01% of that company.
This doesn’t mean anything to us as a buyer. We don’t have any say in the
company’s day-to-day operations. The only piece of the pie in terms of money
you’re entitled to is dividends, which is a quarter-annual pay-out that
companies give stockholders corresponding to the amount of stock they have.
Continuing from our previous example, if XYZ pays out a dividend of 50 rupees,
then from the 100 shares of XYZ that we have, we’ll get ₹5000 from the
company.
How do we invest in stocks?
Stocks are bought using a broker to buy and sell stocks for us. India has two
stock exchanges, one is the Bombay Stock Exchange (BSE), and the National
Stock Exchange (NSE). Stock brokers are necessary to ensure fair play between
both parties involved in the buying and sharing of stocks.
When a company creates shares, they go to the stock market to facilitate the
buying and selling of those stocks, called Initial Public Offerings (IPO). After
this, it serves as a marketplace, where people who have stocks sell them to
buyers using middlemen, the stock brokers.
For college students like us, it’s best to use online stock brokers, as it’s much
easier to do and a lot less time consuming. There’s two ways to make money
using stocks.
What are these two methods?
The first method is holding on to the stocks for a long period of time and
allowing it to rise in price. Let’s go back in time to the launch of the first
iPhone. If you had bought a 100 shares when Apple went public (1980),
roughly around $2200, it would be worth close to $1.25 million now. That isn’t
even including the money made from the dividends obtained! However, this is
over a series of 40 years. Not many people hold for that long, and not many
companies will experience the same rise today.
The other method, the one we’ll look at more closely, is day trading. This is the
method of buying stocks in the beginning of the trading day, and selling them
for profit at the end. This may sound like a surefire easy way to make money,
but it isn’t easy.
Let’s look at a graph of a company’s stock price over a normal work day.

As seen above, the price of the stack varies wildly across the day. The direction
of the graph can be guesses using many technical tools, but there’s always an
element of risk involved. Even for seasoned pros who do day trading as a living,
the risk to reward ratio isn’t very high.
Technically analysing stock curves isn’t easy, but with experience you can get
better at it. If you aren’t confident in this, you can always approach a specialist
who can, but there’s a commission fee to be paid.
For those willing to go in-depth into day trading, learning about buy-limit, buy-
stop, sell-limit, sell-stop, stop-limit and stop-loss are vital to maximise profits
and minimise loss. After this, learning about various technical analysis tools is
the best way to proceed.
Is it worth the risk?
Succeeding in the stock market isn’t a huge mountain to climb. As long as one
doesn’t either hold for too long, or sell too quickly, money can be made from
day-trading. Just spend a bit of time watching Youtube videos and learning
technical analysis, and you can be raking in money in no time.
Just always remember the risks. Never put too much money into any one
stock. Play it safe and learn before risking a lot. Doing all this will guarantee a
good return over time.