Today we will try to know in detail about the mathematics of the entire stock market, following which will definitely help you to become a very successful investor. If seen every year, many people enter the stock market without knowledge, but due to not knowing the right way to invest, they also leave the market quickly after making a big loss.
If
you want to earn good returns in the share market, then it is very
important for you to know about the complete math of the market in
detail. With the help of this article, how should new investors invest
in the stock market today and along with being informed about every
aspect of the market, we are also going to get detailed information
about the complete mathematics of the stock market. Let's start:
Stock Market Math
First of all, before understanding the mathematics of the stock market,
it is very important to have a detailed knowledge about it. Share
market is a market from where people buy and sell stocks of various
companies. Through the purchase of stock in the stock market, people buy
the ownership stake of the companies, and as the business of the
company appears to be growing, the share price also seems to increase
accordingly.
If
seen in the stock market of India, there are 2 stock exchanges NSE and
BSE, where all the companies are listed. More than 1600 companies are
listed in NSE and more than 5300 companies are listed in BSE. You can
buy shares of any companies listed in both these exchanges very easily.
Share Market Account
To
buy shares of any companies, it is very important to have a Demat
Account, from where you can buy and sell shares of any companies very
easily. If you are new to share market then you can very easily open a
demat account with Upstox, which is a very good broker to invest in
share market, click here to open account on Upstox.
Mathematics
of share market can be mainly divided into two parts, one is investment
math of share market and second is trading math of share market, to
understand both of these you have to follow different parameters. Let us
know in detail what parameters you should keep in mind to understand
the math of investment in the share market market and what you should
keep in mind to understand the math of trading:-
Investment Mathematics of Share Market
1. Fundamental analysis of the company:
The
first parameter to understand the investment math of the share market
is that it becomes very important for you to do the complete detailed
fundamental analysis of the company. For this, along with the Balance
Sheet of the company, you must always keep an eye on many different
important parameters like Market Cap, PE Ratio, Book Value, ROE, ROCE.
With
the help of these parameters, you will be able to get a better idea of
the sales, profit, and financial condition of the company along with the
business growth of any company very easily, and this will help the
investors to invest in that company for a long time. With the help of
those parameters you will get a better idea whether the calculation is
ok or not.
2. Details analysis about business:
If
you want to understand the math of investing in the share market well,
then it is very important to keep in mind the second parameter, which is
to analyze the complete details about any business.
Before
investing in any companies, you should know, in which sector the
company is associated with the business and whether or not there is a
huge opportunity for future growth in it, you must also keep in mind
about that.
If
you want to invest in a company for a long time, then you should see
how the company is working in its business keeping in mind the future,
and also what steps the company is taking to increase the growth of its
business in the future. It is very important to keep this in mind that
it is going to be seen working under this kind of strategy.
When
you will get better knowledge about the business of the company, then
you will be able to decide very easily whether the company will be good
in terms of future or not.
3. Monitoring the financial performance:
The
third investment math to earn good returns from the stock market in the
long run is that you must always keep an eye on the financial
performance of the company's business. Most of the companies listed in
the stock market are seen presenting their quarterly results every three
months.
You should see and compare as well whether the performance of the company has improved as compared to the previous years or not.
If
you feel that the financial performance of the company is constantly
improving as well as increasing with the rapid growth, then you can
definitely think of investing in the shares of that company for a long
time.
When
the financial performance of a company is seen to be improving, then
even if there is not much growth in the share price of the company in
the short term, but in the long run you will definitely see a big jump
in the share price of that company.
4. Keeping an eye on the growth of the company's business:
To
understand the math of investing in the stock market for the long term,
you must always keep an eye on the business growth of the company. You
must consider all these things, how the company is showing its
performance in its business now and what kind of plan the company can be
seen working to increase the growth of its business in the future.
One
can give the shares of the company only after earning good returns in
the future, whose business is good in the long run and the management of
the company seems to be taking its business forward in the same
direction.
That's
why you must always focus on this thing, every year the growth of the
company's business is seen going upwards or not, which is very important
for every investor to keep an eye on.
5. Analysis of stock chart :
To
earn good returns from short term trading in the stock market, it is
very important for you to understand the math of trading. To understand
trading well, first of all you should come to analyze the stock chart of
any company, you should carefully see how the candle is moving in the
chart and what kind of pattern it is making.
If
you want to know in detail about how to understand the charts of the
stock market, then you must read this article once. Here you will get
all the information related to the chart of the stock, with the help of
which you will be able to get a better idea that at what time the right
pattern is appearing in the chart and it is the right time from the
market. business perspective. Keep all this information in mind while
trading. urgent.
6. Adoption of trend:
To
understand the math of trading in the stock market, it is very
important to follow the trend of the stock of the company as well as the
trend of the entire sector in which the company is involved.
You
should never trade against the trend in any stock, because trading
always depends on the sector and very few stocks that move against the
trend. Are.
If
you want to earn good returns through trading in the stock market, then
you should always think about investing by following the right trend.
If
you follow the trend well while trading, then the trend itself will
tell you when to invest in that stock and when to exit that stock with
profit, so that you can go through trading in very less time.
7. Focus on market news :
To
understand the math of trading in the stock market, it is very
important to always be aware of the market news as well as the updated
news of the company in which you want to trade.
If seen in trading, there are huge fluctuations in the share price of any company depending on the news.
If
you stay updated with the market news and invest in the shares of that
company at the right time, you can earn tremendous returns in a very
short span of time.
If
you do not stay updated with the market news at the time of trading,
then you may have to bear a big loss at any time, so it is very
important to always be updated with the market news at the time of
trading. Business.
8. Keeping an eye on the support and resistance of the stock:
If
we look at the most important parameters of stock market trading math,
then it is very important to see the support and resistance of any share
price.
Most
of the traders trade by looking at the support and resistance of the
stock charts for some time and earn very good returns, so if you also
want to earn well from trading in the stock market, then you should know
how to identify the support and resistance of the chart. Needed
By
looking at the support and resistance of any stock, you will be able to
get a good idea of when it would be right to invest in that stock price
and when you can get out of it and earn better.
If you trade with good discipline by following support and resistance in the right way, you can definitely make good profits.
9. Properly following stop-loss:
One
of the important math of trading in the stock market is that you should
always know how to avoid losses, for which you have to have disciplined
stop-losses. If seen in trading, most of the new traders make the same
mistake that they are unable to control their losses, due to which the
new trader has to bear heavy losses in any stock.
If
you want to avoid big losses in the share market then you should always
follow stop-loss on every trade with discipline, so that you will never
incur big loss and you can trade with less risk. Are. You can earn very
good returns from this.
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