Mumbai 30th April 2019
Agencies
A popular myth that surrounds the stock market is that it’s only a game of speculations. If you are lucky, you prosper. Else, you perish. While there are no doubts that speculating is a part and parcel of the stock market, it is not necessary that one has to do it in order to gain from the market.
“Trading is something you can do scientifically. In fact, once you have opened a demat account, you must trade! There is merit for you and for your money in it,” says Amit Lalan, Director, Upstox, as he takes you through reasons why it is must to enter the stock trading. Here are 12 reasons why you should trade:
● You can play short-term trends in the market with trades. What is the point of believing that a rate-cut will help banks but not acting on it? Open your trading account, make a trade, and make money.
● You don’t need a large capital to trade. So don’t let that stop you. Eg: With just Rs. 750 (approx), you can buy one stock of Infosys. Your returns may be small but your risk is small too.
● The beauty of trading is that you can learn trading along the way. Nobody starts off as an expert trader; not even the best of traders. You take small risks, learn along the way, and once you are confident, graduate to placing bigger bets.
● Costs are low, thanks to discount broking platforms like Upstox available to you. Here, a cash market trade can be executed at zero cost. You only pay the minimum statutory charges applicable.
● Trading is convenient and you can trade online through your PC or your mobile via an app like Upstox Pro. Trade out of the comfort of your home or even when travelling in the train, bus, or car.
● Trading can be done scientifically using research, analytics, screeners, and charts. It is based on a body of knowledge and is a lot more reliable if done systematically.
● Traders eventually morph into long term investors, once their conviction in equity is built up. In the long run, it is equities that create wealth for investors and help them meet their long term goals.
● An important aspect of trading is that you can become part-owners of the company. An investment of Rs.10,000 in Wipro in 1980 would be worth more than Rs.600 crore today. That is the power of owning shares! Additionally, there are dividends received and capital gains that you realize when you sell shares. In case of losses, it can be written off against the current or future profits to reduce tax.
● You can trade multiple asset classes with a single trading account. This includes equity shares, ETFs, index futures, index options, stock options, currency futures, and even currency options.
● You can trade futures and options to hedge your risk. Eg: if you have bought Reliance, you can protect price fall by purchasing Reliance put option.
● Trading makes it possible to not only buy shares but also sell shares and buy it back. If you feel a stock is going down, you can either sell for intraday, futures, or even buy put options. The choice is entirely yours.
● Last, but not the least, trading in stocks is extremely transparent. You can see the price at which a trade is executed, the profits & losses, and your debits & credits in your demat account.
