Share market is the most competitive place. You need both technical knowledge and daily market knowledge as well. The first thing you need to start investing in the Bangladesh stock market is the BO account or Beneficiary owners Account. This Account is for trading shares. By having a BO account, a person can easily buy and sell shares and hold them. Like our banking system, a BO account is also like an account where you put your money.
But there is a little bit of difference. In a standard banking account for a current asset, you can start your Account with at least 1000 taka. But for the stock exchange, you need to put at least 10000 taka. After that, it is up to you in which market you can invest. Primary market (IPO) or secondary market (buy/sell).
The process of buying stocks in Bangladesh
First, let’s talk about the primary market. Primary market states to the (IPO) initial public offering. If you decide to buy the share from the IPO, you have to check the company’s listings from the both Dhaka stock exchange and the Chittagong stock exchange. When a new company starts listing to the stock market, they issue the IPO for a specific time.
You have to apply for the shares. In Bangladesh, it is like the lottery system. If you get those shares by chance, then that amount of money will be deducted from your BO account. Primary claims are much safer than secondary shares.
Then comes the secondary, which is a little bit risky. But as mentioned earlier, if you know both the market and the technical terms, you can make money even when the market is down. There are two kinds of shares in the secondary market. One is the Bull market, and the second is the Bear market. A bull market means when the price is high—the bear market states when the share cost is low.
When the bull attack he strikes from down to up in bull market share price rise from down to up, the phase bull is used. The bear market refers that when a bear attacks from up to down. This indicates in the share market if the price is fallen and people are still making a profit from this market, known as a bear market.
When to invest in the share market
It is not easy to find out when and which company share price will rise. Most people do not have this technical knowledge. They just believe in the news that spread in the market. Share price increase or decrease is because of some reasons. But mainly political reasons, business profit or loss and the environment in the market.
At the end of 2020 and the beginning of 2021, all of a sudden, share price increase, but the market is totally down, so how it can be possible to share price increase. There is a syndicate behind it. Who starts buying a lot of share at a minimum price and for that reason share price increase? Which we knew as a bull market.
When the purchase rate increase then all of a sudden, the syndicate started to sell the share. For that reason, market prices decrease, and the market fall. For investing in a stock having technical knowledge is a must.
By technical knowledge, I mean analyzing, forecasting. Look upon the companies previous annual reports. How much dividend the company provides to their shareholder. Previously to find out that people need to go to the DSE and CSE. But at this time with excellent availability of internet, it is possible. Because of the internet, you can now find all the latest and previous data of any company and share prices.
Forecasting and optimization are imperative before biding to a company’s share price. Optimization suggests seeing the earlier data of that company. At which year and month share price increase or decrease. The forecasting helps to find out in future how much the share price will increase. It is the estimated amount. So you can easily find out how much profit you will make and how much you will lose.
How to earn money from the Bangladesh stock exchange
We talked about what kind of shares are available in the market and how easily they can be manipulated easily. Now let’s talk about how to earn for it. If the share price is going up and going down, you can make it by doing a simple thing. It is called bidding. If the 40 taka share price rises up to 45 taka, you can quickly sell it. It only happens if the share price rise and you have each and every second update.
What if you won’t be able to watch each and every time on stock exchange share price listing? There is a solution for it as well. It is call bidding. The BO account that you have on a brokerage house will be an agent who handles your Account. You will give him instructions. For example, if your share price is 40 taka, you will bid for 43 taka.
It is a notification to the agent that if the share price rises up to this price, the agent automatically sells it without asking. You will get information through SMS or email.
Now let’s describe the short sell. When the share price is down in general, that means loss. But in the stock exchange, you can also earn money from it. Let me explain about it. For example, a company shares rice that you purchase in 40 taka suddenly falling down all of a sudden. It can be because the market is going under loss or the syndicate that we mentioned earlier they are behind it.
In this case, you can also bid a price. You call your brokerage house agent and tell them that if the price falls and the cost becomes 38 taka, the agent should sell the share. In that case, you get 2 taka profit per share. This is called a short sell.
The recent changes in the Bangladesh stock exchange
In the primary share market, there is a sudden change that will happen from April 20201. In general, when a company offers IPO, it takes a few days to collect. In Bangladesh, the rule is called a lottery, and you need to be at 10000 worth of IPO. But the rules are just going to change from April 2021.
Now everyone will be able to purchase the primary share. But there is a condition behind it. If you buy at least 10000 taka worth of direct claim from a company or newly registered company. To have that primary share, you have to buy at least 20000 taka worth of a secondary share. Which was not mandatory in previous.
It does not mean that you can only buy 10000 takas worth of IPO. You can buy even much more worthy of a primary share. But the rule is first come, first serve. Instead, those who offer 10000 taka worth of IPO will have it. If there are any leftovers, then the other buyer who shows 20000 and 30000 taka worth of IPO will be distributed equally.