10 Stock Market Trading Ideas to Pick the Right Stocks | Motilal Oswal
10 Stock Market Trading Ideas to Pick the Right Stocks | Motilal Oswal

10 Stock Market Trading Ideas to Pick the Right Stocks

We’re only onto the third month of the financial year 2021 and we’re already seeing the stock market touch record highs. Such strong positive sentiment bodes well for investors. If you’re an investor who’s looking to start their wealth creation journey, here are a few trading ideas that you can implement to pick the right stocks in FY2021. 

  • Keep an eye out for trends 

Ascertaining the prevailing market trends and potential points of trend reversals can give you a major edge when it comes to short term trading. And so, invest your time into learning the different techniques of technical analysis of stocks.. It can help you determine the right points of entry and exit.   

  • Watch out for market events

Market events such as quarterly earnings reports, repo rate announcements, and budget presentations have the potential to dictate movements in the short-term. Therefore, it is a good idea to pick stocks taking the current market events into consideration. 

  • Be aware of the debt levels 

The debt levels of a company gives you a lot of information about its financial situation. A company that operates too heavily on debt may not be able to sustain for a long time. And so, it is crucial to check the debt levels of a company before picking up its stock.   

  • The competition is important

Before you choose to pick a stock for trading, always ensure that you check its competition. A company that has weak competition is likely to do better than one that has strong rivals.   

  • Check the price to earnings (P/E) ratio 

Irrespective of whether you’re into short term stock trading or long-term, the P/E ratio can give you some really good insights into how a stock is priced. It can help you determine if the stock is undervalued or overvalued and can help you take a position accordingly. 

  • Assess the future growth potential 

Investors don’t take a company with low future growth potential seriously. Therefore, it is extremely essential to determine if a company has any sort of potential for growth in the near future.  

  • Keep yourself informed of the dividend policy 

If your outlook is more long-term, you could consider investing in a company that pays out dividends regularly. On the other hand, a company that pays dividends erratically is not very well-received by the investors.   

  • Look for companies with good management 

Considering the fact that the management is one of the key drivers of a company, it is extremely essential to trade and invest in companies that have a good and experienced management team.  

  • Diversify your portfolio

You’ve probably heard this already, but it still remains one of the best trading tips that you can implement. Diversification of your investment portfolio helps you reduce risk significantly. Try investing in a mix of stocks across sectors and industries to lower the impact of investment risk.   

  • Make use of rupee cost averaging

Rupee cost averaging can help reduce the impact of losses by bringing down your overall cost of investment. This technique can be effectively utilized for both the long and the short term. In some cases, it can even help you end up deep in profit as well. 

Conclusion

Now that you’ve seen both long and short term trading tips, it’s time you went on to the trading field all by yourself. If you don’t already own a trading and demat account, just visit Motilal Oswal to open a trading account within just a few minutes.

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