Basic homework for beginners for stock market
In my previous tutorials I have discussed about studying and practising but I did not discuss about them briefly. Today I am going to discuss in details. This tutorial describes if you are new in stock market, then what you should do after you know Few preliminary basic terms of Trading, The Basic Terms of Stock Market, Basic Terms of Investment and Trading, and Basic FAQs for the beginners in stock markets. However before all I would suggest you to find out whether you are suited for stock market or not, to find out you can go through with Few questions you need to ask yourself before your first step in stock market.
If you can follow these following steps, you can learn stock markets very easily :
Reading news: This the first thing you need to do. If you do not have knowledge on current affairs or news, then you are blind in stock market. It is not just about reading only the financial news. National, international, political all news are important because most of them have impacts on stock markets directly or indirectly. You do not have to memorize every words a news says, you have to keep in mind what happened and you need to think what could be the impact of that news in current stock market.
As an example: On 26th November when Taj Hotel, Oberoy Hotel and Noreman House attacked by the terrorists in India, most of the stock price started decreasing until the situation was resolved. Now if you think that only national incidents impact on a stock market then you are wrong. On 11th September when Twin Towers were attacked not only American stock markets had a negative impact, Indian stock markets also performed terrible along with the other stock markets in the world. So, read as much news as possible.
Make a list of stocks: After you acquire enough knowledge from news and current affairs, you need to watch stock market. Make a list of few reputed stocks which you would like follow and watch. Do not make it more than 50, keep it as low as possible, 10 or 15 is ideal.
Check the list: After you make that list you have to check results of each stock every day, after a trading day is over. You need to check open, high, low, close, LTP, change, and change percentage, volume of each stocks from your list. I would suggest you to keep a note of these values unless you can remember these tiny details. You need to compare your data with your past notes and find out if there is any abnormal changes in stock price. Generally change percentage will tell you that.
Attempt to analyse: When you are checking the list you need to identify if any stock price increased or decreased abnormally. If yes then you have to try to analyse why the stock price changed so much, it could be for any news or corporate actions. You need to find out the reason. Just remember 1% to 3% change is normal for a stock to change but not more than that. Every abnormal stock price change has a reason. Now your knowledge from news will help you to analyse that reason. Keep a note of these analysis, mentioning why and when a stock price is changing and till what extend. These notes will help you to take further decisions.
Learn reading charts: This is the another most important thing that you really need to do. You should have good knowledge in candlestick chart analysis. Candlestick charts help you to understand and analyse stocks. I have discussed about candlestick chart reading in how to learn or read candlestick chart without any complication.
Try to predict: This is the final step, when you think that you have acquired enough knowledge on above discussed topics start trying to predict. When you are checking the list after end of a trading day, try to think and analyse by your knowledge which you have collected from above steps. Try to calculate which stock price might increase or decrease after a day, week, fortnight and month; Once you predict the price range please write it down. After that particular time check the price of that particular stock, check if your predictions were correct. If it is wrong then you need to analyse more carefully and if it is correct then congratulations, you are on right track and keep practising more. These steps can really develop your prediction and calculation capabilities.
You can also read further advanced tutorials on stock markets and those are How to calculate support and resistance level, How to read financial report or Balance-sheet, When Why and How stock price changes, Few things need to care about while trading.