This post on Bangladeshi stock market will discuss How to Invest in Dhaka Stock Exchange: a complete guideline to make money from DSE.
In other words, the guideline will provide you an instruction on how to invest in share market in Bangladesh. I hope, you enjoy my writing.
One thing I want to tell you at the beginning and that is the truth about all stock market.
In the stock market, there is nothing called 100% accurate. Stock market return can never be predicted 100% accurately. So, it is about probability. Everyone makes frequent mistakes here, and you will too.
Note: The guideline is only applicable for Stocks, not for bonds or any other financial instruments.
The stock market is the most difficult place to make money. You need to know a lot of things before making an effective investment and having a lucrative return. Dhaka Stock Exchange is not an exception. But, if you follow some steps properly, you will be able to make a smart return for your investment. And again, the definition of smart return varies in the stock market.
Invest in Dhaka Stock Exchange : A Complete Guideline
What will I be Covering in this guideline?
- In depth discussion on Dhaka Stock Exchange, guidelines for beginners, & Stock Market FAQ;
- Steps on how to start share market business in Bangladesh;
- A brief discussion on stock analysis, and how they are related.
Step 01: Before putting money on your BO Account, observe the Market, and Try to Understand it Properly.
Most of the people do not do it. They think they will just open an account, put some money, and start making a huge amount of profit. But, it does not work by that way. It is a totally a wrong idea. You are not from the most of the people as you have started learning about the stock market.
Watch the market for at least six months, and read all the business and economic news available in the market. Try to understand every news and make a bridge among the news and the industry. Again, I am telling you. You do relate the economic and financial news with the respective industy, not with the immediate stock price movement [At least for short run].
Use the links provided below to have information on Dhaka & Chittagong stock market.
Dhaka Stock Exchange [Dhaka Stock Exchange Official Page]: Its the largest stock market of Bangladesh. Check the DSEX index, individual price change, percentage changes, Volume Traded, Company capital, Market capital, Daily market news, top ten gainers, and losers. You will have the brief picture of daily market change on the front page.
They have recently updated their website. A lot of new features were added to the website.
Chittagong Stock Exchange: Another stock market of Bangladesh.Visit this page frequently. Important thing is, most of the stocks are listed under both of the stock exchange but there are few listed only under one stock market.
Stock Bangladesh: This is the most popular supporting website for Dhaka Stock Market analysis. You can get support for both technical and fundamental analysis from here. They have an extensive database for individual stocks. Also, they have tools to analyze the fundamental conditions of individual stock and the market as well. You can download daily market data plugins from here and use it in AmiBroker(a software used to draw technical charts for analysis).
Financial Express: To me, this is the most reliable source of information on stock market and other business areas. I am repeating it’s the most reliable one. Do not visit any junk websites, and strictly follow this. Otherwise, you will be misdirected which will influence to make a wrong decision.
There are also many other reliable newspapers you can follow, but firstly be sure none of them is a junk news provider.
Lanka-Bangla Securities: Another reliable source of getting company, and market information.
[Note: Remember one thing, you have to have the analytical ability to make a decision. Secondly, you have to have some statistical, economical, and financial assumptions to support those decisions which you will get from sources like reliable newspapers. Use these wisely to have maximum output. I, here, can make you smarter by giving you directions, but you are the person who’s going to take the ultimate decision.]
Step 02: Learn and Earn from Dhaka Stock Exchange
I will recommend three types of analysis you must learn. And, those are Fundamental analysis, Technical analysis, and Psychological/Market Sentiment Analysis.
I am starting with technical analysis because it is my favorite way of analyzing a stock. But this one should be applied after conducting the fundamental analysis. psychology analysis is not that much important but still add some weight.
Technical analysis will give you the answer on when a stock should be bought, and when to avoid. Some technical indicators are RSI Indicator , MACD, Bollinger Band, and CCI.
In the stock market, you basically work on three types of decisions. And those are buying decision, holding decision, and selling decision. Technical analysis will tell you exactly when to buy a share, the holding time of the share, and the selling time of that share. Below I’ve given some site addresses which you may find helpful.
- Stock Charts – The most famous one.
- Investopedia – Another helpful site.
- Youtube – you search the topic here, and instantly get the tutorials.
Use Stock Bangladesh website (that I mentioned earlier) to practice/interpret the stock chart. And also, you can use Amibroker tool which is available on the internet.
Technical analysis will help you decide to buy, holding, and selling decision which will reduce your risk vastly. But there are other risks related to the fundamental condition of that individual stock.
- What is the current status of the company?
- What about the management conditions?
- Does the company make enough profit to declare a dividend?
- What is the earning growth?
- What is the perceived value, market, anticipated value, intrinsic value of the company?
- What about the authorized and paid-up capital?
- Does the company really exist?
Fundamental analysis will answer those questions. Basically it will give you fundamental support along with technical analysis. If Technical and Fundamental analysis are supportive, you now have done with the major decision-making criteria. Now comes the third most important decision-making strategy of investment, market sentiment analysis, or market participants psychology analysis.
It is the overall attitude of investors for a particular security, or the market. It is the feeling of the people how they think about the condition or current status of the securities. Basically, this variable changes over time as the image of a company changes over time. But what changes this image? Rumor, bad profit, huge loss, or other management,financing, or operation related scandals.
Step 03: Open an account with a Local Bank
Now you know many things about the stock market. Its time to go for a bank account. You need a bank account to open a BO account. Because BO (beneficiary owners account) account is not itself a bank account. Its used for buying and selling share. When want to buy a share, you have to transfer money from your bank account, or withdraw when you want to get your money back. You can deposit cash directly to the BO account but you can not withdraw directly from your BO, you can not use it as a current account.
The requirements of opening a bank account
- Passport size pictures
- National ID card
- Birth Documents
- A Permanent Address
You can open a bank account at any local bank available in your area, or close to your area.
Step 04: Brokerage House Is Mandatory
Open a BO(Beneficiary Owner’s) account. Go to any Brokerage house, and collect a form from there. You have to give your detailed personal information along with the bank accounts information. Within 7 days your account will be ready for trading shares.
You can start investing by only 5 thousand Bangladeshi Taka. I will recommend you to practice with a small amount of money for first few months. Remember, Not money, it is a master mind you need to make money in a capital market (Stock Market).
Step 05 Management Your Money : Learn Money management techniques. Managing money is a very important strategy in the capital market. The more efficient you are with managing the money, the more perfect investment you will be making.
Step 06: Play In The Market
Now you are ready to invest in capital market. On the basis of stock market business, there are two types of business.
Trading: You buy/sell your share every day while in profit, or you hit stop-loss.
Investing: You invest on the basis of timing. Those are short term, mid term, or long term basis.
In the both cases diversification is needed which will reduce your exposed risk. Find out in which strategy you are good, and start making money there.
One thing I will tell you, Do not let your emotion influence or control your decision. There is not value of emotion in stock market, but mathematics.
So, Watch the market for 6 months, Learn analysis along with watching, Open a bank account, Use the bank account to open a BO account, Invest/trade in the market, and make money.
And that’s the Guidelines To make invest in Dhaka Stock Exchange for beginners.
What you should do in Dhaka Stock Exchange?
- Do maths as much as you can. any type of maths. That will sharpen your critical thinking ability.
- Do fundamental analysis
- Do technical analysis
- Do market sentiment analysis
- Do money management
- Do take your profit from trading account
- Do read business news on regular basis
- Do check the charts daily
- Do avoid market rumors
- Diversify your investment
- Believe your business strategy
- Do set the strategy first, then do the trade
What you should not do Dhaka Stock Exchange?
- Do not listen to rumors
- Do not visit any junk/crap newspapers
- Do not talk about stock with an amateur or less experienced person
- Do not listen to your fellow investors
- Do not invest all money
- Do not invest the major amount of money in a single share
- Do not take emotional driven decision
If you have any query about stock market, please do not hesitate to ask your question in the comment section below.
The post analyzed and elaborated on the writers personal point of view. It is an instruction and obviously, and educational post. It provides the guideline if you already have decided to invest or trade in the share market of Bangladesh.
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