Stock Market for Beginners: The Definitive Guide For Investing

This is a complete beginner’s guide to Stock Market in 2024.

So if you want to start investing your money in stock market then you’ll enjoy learning all the basic concepts of Stock Market in this new guide.

Also gave you all stock market basics pdf & books suggestion to start with.

An investment in knowledge pays the best interest.

Benjamin Franklin

So now Let’s dive right in.

What Is Stock Market?

Stock Market is a set of exchange of public listed companies which are bought and sold publically. Also it provides a platform for investors to trade derivatives, bonds and mutual Funds. It also helps country’s and companies economy to grow bigger.

Financial Activities of stock market is conducted by stock exchange.

Now the leading stock exchanges are New York Stock Exchange and Nasdaq in USA, Bombay Stock Exchange (BSE) & National Stock Exchange (NSE) in India & Tokyo Stock Exchange (TSE)

How Stock Market Works?

The stock market is a platform to invest on derivatives, bonds, stocks, and mutual Funds by buying and selling shares. There are many key factors come in while operating this some of are:

Listing

Company register itself on stock exchanges some of them are Nasdaq & Bombay Stock Exchange BSE, they enter into the market through primary method that is initial public offering (IPO)

Trading

Investors need a stock brokers to connect with stock exchanges to buy and sell shares of the company. When the investor want to buy a share they place bid on some amount and if the seller is agree with the amount a trade is occurred.

Have you ever thought how price is determined of a particular share. So here is your answer

Price Determination

Stock price of particular stock is determined by the supply and also the demand of the stock. Demand of a stock is directly proportional to stock price.

If investors demanded and buy lots of stock the the price of that stock will rise.

If the investor is uninterested and less amount of stock sold or more amount of selling instead of buying happened then the price will fall.

Regulation

Stock Market is regulated by government bodies like Securities and Exchange Commission (SEC) in USA & Securities and Exchange Board of India (SEBI) in India.

Regulation to help to control the stability in the market and also fair and protected to investor’s from fraud activities.

Stock Market Basics To Start Your Investing Journey

This are some basic concepts related to share market by which you should start your journey it is much to read all of them and gather the information.

Annual Report

Annual Report is a report that every company releases every year to showcase it’s growth to public, it helps them to impress the share holders and also to investor’s by knowing there fundamentals in-dept.

Many people read it to reasearch on that stock and make descision to whether buy hold of sell the stock in future.

Arbitrage

Arbitrage is buying a share from a particular place and selling it into foreign place where the share price can be more than the bought price.

Example: If you bought a stock from a market place where the price is 5$ or 50Rs and you sold it to another market place where the price is 7$ or 70Rs this is how it works.

Averaging Down

Averaging Down is a strategy used by most of the investors to buy a large amount of stock when the price falls of a particular stock. This gradually decreased the average stock price of the stock.

This is pretty common among all to conver up the average stock price and get some profit in the stock.

Bear Market

Bear Market is certain period when the stock prices are falling in downward and all the investors are talking about it.

Bull Market

A bull market is a period where the stock prices are going to rise in future.

Broker

A Broker is a person or a team who buys and sell our shares and also connect the investor with the stock exchanges in a price of some fee or commision.

Dividend

Dividend is a amount which company pays to there share holders who owns there shares in some percentage. Every company’s policies are different so not all company gives dividend. If you are that investor who owns a penny stock then you will not get any dividend.

Dow Jones Industrial Average

Dow Jones Industrial Average is the 30 most traded blue chips stocks which are listed on NYSE (New York Stock Exchange)

Sensex

Sensex is also same like Dow Jones but it is the average weightage of the share price listed on BSE.

Exchange Traded Fund (ETF)

Exchange Traded Fund (ETF) are the group of stocks or bonds which gets merged in a single fund that can be bought or sell in major stock exchanges.

Initial Public Offering (IPO)

Initial Public Offering (IPO) is a stock of a private company get listed on stock market first time and becomes private for all publically.

Market Index

Market Index is a performance track of a collection of stock to represent a particular industry.

P/E Ratio

P/E Ratio or Price-Earning Ratio can be referred as a ratio of Company Share Price to the company earning from per share.

What is Traded on the Stock Market?

Financial Instrumentals are traded on stock market. Instruments include stocks, bonds, derivatives, Mutual Funds.

Stocks

Stocks are the ownership you buy or sell of particular company. When you buy stocks you buy some piece of percentage stake of that company. As the company grows the share price increases fast and if the company offers you dividend then you will get profit distribution also.

Bonds

Bonds are like loans which you offers to government or a company. They can be considered as a safer investment as in this the issuer who got your investment amount has to give the price back with some interest . Also it is market independent so there is no money fluctuations can be seen.

Derivatives

Derivatives is a type of financial contract whose value is dependent on a share, group of assets. There are few types of derivatives some of them are future, option, swap and forwards.

Mutual Fund

Mutual fund is a types of safe investment in which many investors money is bought into one to buy stocks, bonds and etc. This investment is not managed by a investor but by a manager who is expert into finance investment. There are some types of mutual Funds some of them are Equity, Bond, Short-term debt, Hybrid mutual funds.

What Is Stock Exchanges?

Stock exchange is a platform where buyer gets connected to the seller of the stock. There are two stock exchanges in India that is NSE & BSE which gets regulated by SEBI & in USA there are NASDAQ & NYSE which get’s regulated by SEC.

Who Invests in Stock Exchanges?

There are many types of investors invest in stock exchanges some of are individual, companies and institutions etc.

Individual Investors

Individual Investors are the investors like you and me who buys and sells stocks in behalf of your own. They can directly or indirectly do the trade with the help of a brokerage account or can do with the help of ETF & Mutual Funds.

Institutions Investors

Institutions Investors are the organisation who invest others money in a financial Instruments like mutual funds, pension funds & bonds etc. There have a large impact on stock market as they manage large amount of trade everyday.

Company Investor

Company Investors are the company own investors who invest money to buy & sell they own shares. They do this to raise capitals, reward employees or repurchase there own shares.

Best Strategies To Get Profit In Stock Market

There are many strategies you can try in your stock market journey and personally I also try many of them. But there are some that is in my favourites list which I think you should also try.

#1 Fundamental Analysis

Fundamental Analysis is a analysing economic and financial factors of a stock also with the help of a security’s intrinsic value. Intrinsic value is the value given to the stock on the behalf of there financial conditions. Also in short can be called as determining real and fair price of the stock.

#2 Technical Analysis

Technical Analysis is a type of study of the stocks data it can be on past and present graph stats. Analysis is done of the price and the volume of the stock.

So in short this strategy focus mainly on volume and price of stock in past and present time.

Best Books To Learn Stock Market

This books are my personal favourite and if you are also searching for Best Books To Learn Stock Market then try this books as they are personally ordered and listed out by me.

• The Intelligent Investor by Benjamin Graham
• One Up on Wall Street by Peter Lynch
• The Warren Buffett Way by Robert G. Hagstrom
• The Little Book That Beats the Market by Joel Greenblatt

Intelligent Investor is my own personal favourite and top at the list so begin your journey with Intelligent Investor and then go book-by-book.

FAQ You May Ask Us

Conclusion

I hope you found this stock market beginner’s guide helpful.

Now want like to hear from you what you say:

Which information from today’s post you really impressed with?

Are you going to technical or fundamental analysis?

Let me know by leaving a comment below.