Investing in stock Bangladesh is not a difficult task. But you need to expertise on Bangladesh stock market mechanism so that you can make money from stock investment. In reality, Bangladesh stock market is highly volatile and uncertain. Hence, you have to master on traders’ psychology as well as fundamental and technical analysis in order to earn money from stock Bangladesh.
How to start investing in stock Bangladesh?
If you are beginner in share investing, you should start with stock market basic knowledge. Moreover, you must control your greed and emotion unless you will fail to preserve your own capital. A foreigner may ask Is there any stock market in Bangladesh?. Yes, Bangladesh has two stock exchanges: Dhaka Stock Exchange and Chittagong Stock Exchange.
Make up your mind is the first step to start investing in stock Bangladesh. You must take stock investing as a serious business. Your strict determination and long-term goal can help you to learn skill and experience. You can remain active or passive in stock investing. You may become a day trader or a passive investor. This is one of the most significant reasons to invest in share market. At the beginning, you should decide whether you want to be a trader or an investor.
2. A bank account
Opening a bank account is the prerequisite to create a BO (Beneficiary Ownership) account. You can open a bank account by deposit a specific amount from any Bangladeshi banks whether it is public or private bank. Your bank account will be used to deposit money in BO or withdraw money from BO Account. In order to open a bank account, you need National ID’s Photocopy, Passport size Photos, Nominee’s NID Card’s Photocopy, Passport size photos and some other information to invest in stock Bangladesh.
3. Brokerage House
You can visit the website of Dhaka Stock Exchange and Chittagong Stock Exchange to get brokerage houses’ list. Some of the brokerage houses have accessed to more than one exchange. It will be a good decision if you can choose a cost-effective brokerage house.
You can choose a brokerage house which has permission to trade more than one exchange. Your stock broker can legally demand 0.25% to 1% commission for each transaction. Remember that this commission rate is applicable both on buying and selling stocks.
4. Beneficiary Ownership (BO) Account
In order to open a BO account, you need to talk with a stock broker agent. He will provide a form like opening a bank account form. Documents and procedures are same like bank account opening. Before choosing a brokerage house, you should ensure better service and less commission. Your stock broker will provide you a Client Code after filling up the BO Opening Form and submit required documents. You can perform all transactions through Client Code.
5. Study stocks
You must study the stocks and whole market to select the best stock for investment. You should read Dhaka Stock Exchange Broad Index analysis so that you can understand about candlesticks pattern of DSE for last one year.
For being a good investor, you need to know how to buy stock for long term investment. You should Learn technical and fundamental analysis to study the companies. For being a short-term investor or trader, you must master on RSI indicator to know buying and selling signal; Candlestick Chart to know price movement and Value at risk (VaR) to know risk analysis.
Moreover, you should learn best fundamental indicators so that you can study intrinsic value of stocks. Then try to understand the economy, market condition and sectors wise performance. Economic factors, Market Volume, Index Trend, Monetary situation, Country’s financial condition are the common factors you need to analysis.
6. Make a deposit in BO
At first, you should start with deposit a small amount of money in your BO account, such as 10000 to 20000 tk. Gradually, increase your deposit after understanding the market properly. If you have much money, don’t need to deposit in a single day. You can transfer money to your BO Account through offline and online mode from your bank account by selecting other bank transfer or deposit cheque. I suggest to use online transfer method.
7. IPO Application
You should start investing in stock Bangladesh by initial public offering (IPO). According to last Security Exchange Commission (SEC) Law, you have minimum 20000 tk market worth in secondary market to qualify for IPO application.
At present, maximum IPO application for a specific stock is 10000 tk. Hence, you need at least 30000 tk to apply for IPO. IPO shares are profitable and risk free. So, you can start with 30000 to 35000 tk for qualifying IPO application in Bangladesh stock market.
8. Secondary market
On your research step, you need to study at least 30 to 50 company’s stocks for selecting stocks for investing in secondary market. Gradually, short the list, and finally select 3 to 5 stocks for investment. As your initial invest amount is small likely to 30000 tk, you can buy 50 to 100 shares from each selected company. Then hold your shares for 20 to 30 days to realize market movement.
9. Sell or hold
How much time should you hold your holding? This answer depends on your investment nature. You can hold stocks both for capital gain and dividend. Most active traders wait to gain 10% to 20% capital gain. But investors want both capital gain and dividend. When you see that your holding is increasing, hold shares for some more time.
Your ultimate target is profit making. Fix your target and develop your own strategy to figure out holding techniques. You can save your capital by following stop loss rule in case you have made any trading mistakes.
For any business, you have to understand all about this business. Similarly, you should learn Bangladesh Stock Market whole mechanism.
Details about Bangladesh Stock market
Bangladesh Stock Market Overview: Investing Analysis in DSE & CSE
Bangladesh Share Market Analysis: How to Take Buying & Selling Decision
From now, you may have some questions about stock Bangladesh.
Read the following articles to get the answer of your questions.
Does Bangladesh Stock Market allow short selling?
Does Day Trading Allows in Bangladesh Stock Market?
How can Bangladeshi invest in foreign stocks? Investing in US stock market
Does Bangladesh Stock Market allow Circuit Breaker?
How can I buy shares in Bangladesh?
How do I open a BO account in Bangladesh?
Do you have any idea about Bangladesh stock market crashes? Perhaps you have. But you may not know details about stock market crashes in 1996 and 2010-11. Don’t worry. Financial Ask’s reader will get better insight about stock market crashes in Bangladesh. Just read the below article.
Reason behind Stock Market Crash in Bangladesh in 1996 & 2010-11
Till now this article exceeds more than 1,000 words. But, the article has more than 10,000 words to read if I count the words of internal links that I have attached with this article. As I have written articles earlier about investing in Bangladesh Stock Market, intentionally, I have cut short this article.
If you have spent some hours to read the whole links, you will have ultimate idea both on investing and stock Bangladesh. Stay connected with Financial Ask for learning investing, business and personal finance.