It is a surprising fact to know that Indians are averse to investing their money at the stock market. Yes, stock markets are volatile. Though returns on investment are on the higher end of the spectrum, the risk involved is also equally high. It is for this reason, quite a lot of us are skeptical about investing our hard-earned money into shares, stocks or derivatives. However risky trading stocks may be, there are ways and means to get around risks. If you know these, there’s a good chance that you can reap the rewards you have only ever heard of. These are the top six secrets you need to know, to emerge as a successful trader or a stock broker.
Let us know how:
You have to buy low and sell high
Among the best tips of stock trading for beginners, experts and analysts agree that buying low and selling high is a fundamental way to make gains. When share prices fall or dip in the market, this is when you need to buy shares and while the price of shares goes higher up, this is when you have to sell your shares. Though this sounds quite simple, how many of us actually follow the thumb rule?
A Hindustan Unilever share that was bought for INR 100 per share 10 years back is selling at INR 900 today. What if you have 1000 shares? You can make a profit of Rupees 800,000. Selling price is 900*1000= 9, 00,000. Buying price is 100*1000= 1, 00,000. Difference amount is your profit margin. (9, 00,000-1, 00,000).
However, you should make yourself aware of one error that many investors make while following the plan of buying low and selling high. You may buy shares at a low price, but how do you know how “high” a high price ought to be? You have to use some rationality in determining the correct “high price” to sell at. Of course, in the example mentioned, the price has gone higher by nine times, so obviously the profits are plentiful. Yet, the common mistake investors make is to let go of shares when they increase just a bit more than they were purchased at. The key is to hold on to stocks for the long term to make meaty returns.
Market fluctuations are a part of the game
Swiss chocolates have always been in demand, whether the markets are bullish or bearish. The economy has faced recession, but the Swiss Chocolate making factories have not shut their doors closed. Disney land has always fascinated the holidaying crowd. It hardly matters whether the economy is facing recession or not. People prefer buying Apple lap tops or mobile phones, no matter what. Apple Inc., Swiss Chocolate factory and Disney world have faced terrible market fluctuations. But these are companies that have stood tall. Similarly the investor needs to take the ups and downs of the market in his/her own stride and strategize moves accordingly.
Investors should know that patience yields rewards in the stock markets, and especially if investors hold those blue chip stocks, long-term investment proves fruitful. Blue chip companies are those who have a solid financial backing and are historically known to do well. They can withstand market volatility and still be solid in the end.
Long term returns can help you in a big way
Whether you want advice on online trading for beginners or experts, there is one recommendation that will always be valued. This is to hold on to a good stock, instead of selling it at the first hint of any profit you can potentially make. By keeping the stock with you, you stand to make more gains in the future.
When you pick a “good stock” to invest in, you have to do your research thoroughly. You need to look at a company after thoroughly analyzing the half-yearly or annual profit margin reports before you plunge into buying stocks or shares of that particular company. Short-term or windfall profits are not going to be a long-standing solution to investing your hard-earned money into the shares, stocks or derivatives of a particular company. Analyze the 5 year charts of the company and then zero in. You need to study, how stock markets in India work, to get a deeper insight on the same.
Get the basics right - How to start investing in stocks
Learn the stock market basics, how to trade effectively, current market trends and so on, before you trade in the live market. Quite a lot of trading companies provide you with an online trading program helping you get your basics right. They also teach you how to work on a trading platform without any hassles. There are a couple of free downloadable trading platforms, as well. You can search the internet, to get a cue on the same. You practice your transactions on a dummy platform, before you start trading with a live dealer.
Besides practising trades on trading simulators, investing in stocks is easy if you know some rules that govern the market. Besides rules for trading as earmarked by SEBI, you should pay heed to market trends and know the best and worst times to invest.
Invest in shares of companies that offer dividend from time to time
Apple’s share price dropped from $ 110.38 to $ 105.26, in 2015. That was a market decline of 11%. But investors, who owned the shares of Apple Inc., just lost 3%. How is it possible? The reason is, Apple Company offered its share-holders with a dividend of 5% during the course of the year. Investing in shares or stocks in companies that offer you a sizeable amount of dividend are worth considering over companies that do not offer dividends. You can learn Stock Market Basics by reading renowned books written by world-class investors like Warren Buffett or Carl Icahn.
The most pertinent of fundamental stock investing tips is to know about companies well. When you start your investment journey, you may likely know nothing about companies on the stock market. Hence, to invest wisely, you should do a detailed case history of companies that are solid. Investing in these will help you earn a substantial amount in the long run. Even if you think you have found a promising startup to invest in, you may not have the information on any dividend payout. Yet, if the company is in an upcoming sector, like technology, your investment is likely to bear fruit.
Curb your tendency to make more money
Quite a lot of ambitious brokers or intra-day traders make this particular mistake. When they know that their day at the trading market is not going all that great, they still try making more money. They push the buttons through multiple transactions. In the whole chaotic scene, there is every possibility of the entire investment getting wiped out, in one shot. Never make this mistake.
You can get carried away at the stock market, either by other investors or your own zeal to make a fast buck. This should never drive you in your choices of stocks or strategies to invest. Keep emotions at bay, and let your rationale take over in the environs of the stock market.
While your day at the stock market is not all that great, just leave the table and strategize your moves for the next day; and, then start trading afresh. Every day is a new day at the markets.
These are important factors, tips and techniques pertaining to stock markets. Stock markets in India are definitely booming for you to make all the money in the world.
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