I'm certainly no expert but this what I would have done if I had to start all over again
This is something which a lot of people get confused about, and fairly so. With SO many resources around us, it often does get overwhelming. But according to me, the right start is what decides how much money you’re going to make in the markets in your life… got you didn’t I?
No, it’s not. Investing and trading is like a marathon, no one who sprints right at the start is destined to win, but a good start sure does help.
Now, coming to the main part — how should you start?
There are two divisions here: Trading & Investing. And two methods of analysis: Fundamental or Technical Analysis.
To simplify it on the most basic level, the difference between trading and investing is in the timeline:
- Trading: Buying and selling shares for short-term profit, such as within a week or a day.
- Investing: Buying and selling stocks for long-term gains, such as within months or years.
Coming to the method of analysis:
- Technical Analysis: Involves evaluating securities by analysing statistics generated by market activity, such as past prices and volume.
- Fundamental Analysis: Attempts to measure intrinsic value by studying the overall economy, industry conditions, company financials, and management.
So, what should you do as a beginner?
- Start with Fundamental Analysis: Understanding the basics of how companies operate and are valued is crucial.
- Incorporate Technical Analysis: Once comfortable with fundamentals, technicals can help refine entry/exit points.
According to me it’s very essential to get your basics right first, and you can decide what to do, but my suggestion would be to start with Zerodha’s Varsity course first.
It’s a free resource, available in both English and Hindi. Start with these three modules:
- Introduction to Stock Markets
- Technical Analysis
- Fundamental Analysis
This should not take more than a week or two to complete, and after this, you’ll get a very good idea of what you’re getting into.
Alongside these modules, you should start reading a few books about the stock market and different trading strategies. My suggestion would be to start with One Up on Wall Street by Peter Lynch — a very famous book.
This book will be a little challenging to start, but who doesn’t like a good challenge? It will show you that investing methods don’t need to be filled with complex excel models and that the beauty of investing lies in its simplicity.
Next steps after understanding the theory
You will need to open a Demat and Trading Account.
- Demat Account: Holds your securities in electronic form.
- Trading Account: Used to place buy/sell orders.
Most major banks and brokers in India offer these. I personally use Zerodha and it’s been pretty convenient.
If you can’t open an account right now, try paper trading using fake money. It’s a great way to practice without risk. Check out Moneybhai for that.
Stay updated and keep learning
Subscribe to financial news, read market analysis, and consider joining online communities like:
- Finshots
- ValuePickr
- Value Investors Club
- MarketSmith India
Also, I’m pretty sure that some of the best books in the world are written on the subject of Finance. A few suggestions:
- The Psychology of Money by Morgan Housel – Personal Finance
- Diamonds in the Dust by Saurabh Mukherjea, Rakshit Ranjan, Salil Desai – Indian Scenario
- The Dhandho Investor by Mohnish Pabrai – Indian Scenario
- One Up On Wall Street by Peter Lynch – Investing Style
At this point, you yourself will have a very decent idea of what to do next. But to get started, this is enough.
Final thoughts
Be patient and stay disciplined. Investing and trading are not get-rich-quick schemes. They require time, effort, knowledge — and to some extent — luck as well :)
Hopefully you are ready to put in the first three and be assured, the fourth will follow.
All the best for this rollercoaster ride, sit tight and enjoy!