Would you take partnership in a business which is not making good profits, does not have its eyes on the future, and has a bad reputation? You won't. When you invest in stock market, you are in many ways taking a minuscule partnership in a business. This is why the business and the sector is important and requires to be studied.

Do study the company, however little:

For day traders who are in the market for quick bucks, it does not matter how the company is doing or where it is headed. However for a retail online investor like you, the preferred method is long-term. That's where you can avoid many of the pitfalls of day trading or trading as a whole. A long-term investor is not a trader. He does not trade shares often. He buys and keeps it for years together.

Your knowledge about a business, its performance, knowledge of the sector it belongs to, is the single most important prerequisite for entering into online share trading. Your skill with the PC or your bank balance is not important. Study the business, its performance and future. Once you have worked out on this vital area, online share trading can be a breeze.

Constantly update your knowledge:

It is also essential to continually update your business related knowledge by reading into news, world economics, and other global developments. However, purely with respect to using online share trading system on the Internet is concerned, it is very simple.

As I mentioned already, more than the familiarity of how to trade shares, what is needed is a fundamental understanding of businesses and investing in those businesses.

The need to know the market:

Share trading is an experience only you can gradually master. However a fundamental education and clarity of purpose needs to be in place before you jump into the fray. As you may are aware, when you buy stocks you are buying into businesses. Understanding the direction of that particular business, the Indian economy and knowledge of growth sectors is an absolute necessity. 

What is also needed is the knowledge of companies which have the best management, understanding of their product portfolios etc. Basically do not buy stocks of companies which you don’t understand. Learn at least the basics about that company and preferably as much more as you can before taking part in that business through purchase of their shares. 

Another important aspect of stock markets and share trading is the knowledge of the risks. We will go into details as we carry on.