Stock Market Basics Chapter 1. Introduction to Stock Market

 

Stock Market Basics.

Chapter 1. Introduction To Stock Market.

Hello Everyone,

Today I'll be starting my new series "Stock Market Basics."

In this, we'll explore the stock market and learn a bunch of stuff as I promised in my previous article. I'll be uploading one chapter every week, so stay tuned.

Before we learn the inner workings of the Stock Market, we need to understand the stock market, which is what this chapter is about.

Now before we begin, this series will be on the Indian Stock Market.

So let's begin,

You might have heard from many people that Stock Market is a scam, or that the stock market is gambling.

But is it true?

Well, no it's not.

But why do people believe so, to understand we need to understand the stock market itself.

What is the Stock Market?

Stock Market is a marketplace, where people buy and sell shares of companies and businesses.

Now it doesn't have a physical location, but the transactions take place digitally.

Now, what are shares?

Okay, let me put it this way.

I want to start a lemonade stand and sell lemonade. Now, I need to buy lemons, sugar, glass, salt, etc.

It cost me Rs. 10 to make a glass of lemonade. So I ask 5 of my friends to each contribute money for 10 glasses of lemonade and in return, I'll give them the money I make from selling that 10 lemonades, so now, they each pay me Rs.100 and I start selling my lemonade for Rs.15.

So to every glass I sell, my friend gets 5 rupees extra.

In the above anthology, the 10 lemonade glasses are shared and my friends are investors. And that's the Stock Market.

So, basically, In the stock market, people buy shares of a product and pay the company to manufacture that product and in return receive a certain amount of profit.

Now the question is it safe to invest in the Stock Market.

Is Stock  Market a gamble?

I get this question a lot. Many people tell me how the stock market is a gamble. But I want to ask you this, tell me, which business is not a gamble.

Instead, the stock market is a lot safer than most.

While many people keep comparing the stock market with gambling, let me tell you an interesting fact there are 90% higher chances of you becoming a millionaire through stock trading than through gambling.

Investing in the Stock Market.

The Stock Market has had a bad reputation since the Harshad Mehta scam.

But it has become a lot safer to invest since the late 90s.

Now we have SEBI, Security and Exchange Board of India, the NSCCL (National Security Clearing Corporation Limited) ICCL (Indian Clearing Corporation Limited) who make sure the stock market is a fair game. (I'll talk about them in more detail in the upcoming chapters.)

And with digitalisation, the middlemen are no longer part of the stock market. Most people nowadays, use apps such as Upstox, Zerodha Kite, and many others to buy and sell stocks.

So another Harshad Mehta cannot exist. But can you get scammed, through digitalisation? well no, but can you lose money? Yes.

The stock market is like a business, you are going to lose money, you'll have to take risks, but you'll also be able to make a profit.

But who is this you?

Who should Invest in Stock Market?

Stock Market isn't everyone's cup of tea. You can't just invest in the Stock Market. And contrary to the popular belief, the stock market isn't about how much money you have, but about how smart you are?

You'll find stock for as much as Rs.1. it isn't about money. when you hear about the stories of people going bankrupt due to the stock market, it is mostly due to stupidity.

So here's a bunch of things you need to understand before investing in the stock market.

• Stock Market needs a brain.

You need to understand, that you don't need to make millions to start investing.

But you definitely need a lot of brain cells.

People do the mistakes of Investing without any prior understanding of the stock market.

Stock Market is like any other field, you need to study it before you start. No one will let you perform surgery without any prior education in the Medical Field and proof of residency.

You need to take time to understand the stock market, learn it's working, one of the few reasons why I started this series.

• Stock Market needs Patience.

One of the many reasons why many fail in the stock market is because the investors do not have patience. You need the patience to invest in the stock market.

Most people invest in stock to take out the profit, which is a really bad idea.

If you are one of those people, you should probably stay away from the stock market.

Investment in the stock market should be long term, and not just because you need money. 

• Stock Market need Persistence.

Just like any other business, the stock market has its risk and its profits.

Some people are bound to give up after the outcome isn't what they expected it to be. These are the kind of people who should never join the share market. 

Share Market needs persistence, it needs constancy. If you don't have it you need to give every day to understand the Stock Market, understand which share to buy, how, when and why.

You are going to fail, have a huge loss, financially but you need to be persistent when it comes to investing.

Conclusion.

So today, we discussed what is the stock market, should we invest in it and who should invest in the share market.

And that's it for today. I'll be coming with a new chapter next week, in which I'll discuss how business work and how the stock market comes into play.

Next week, I'll be publishing the first chapter of my new series "The Huge Small World" so stay tuned.

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Thank you for reading.