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The Dos and Don'ts of investing in Stock Market

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Published Date: 07 Feb 2020Updated Date: 30 Aug 20246 mins readBy MOFSL
Dos and Don'ts of Investing in Stock Markets

Investing in stock market can be a wild ride for new investors. People can take a lot of time before they start feeling comfortable with stock market investing. There are a number of Do's and Don'ts in the Stock Market that can be followed by these investors and these can help them generate profits.

Let us now have a look at the do's and don'ts of investing that will help beginners to reduce the mistakes they make

Traders can start using a virtual trading app to learn more about the stock markets for free. With a number of free apps available, beginner traders can have a good practice before making their actual stock market investment. Don’t wait as there is no perfect time to make your entry into stock markets.

Do start your investments early as it helps in a good wealth accumulation. Don’t get carried away with initial profits and invest wisely.

Do good research before making any investments as this is considered as the key to anyone’s success. It is also important to know what is happening around. Don’t let the trading fees be more than 2%. For any clarifications, do talk to your brokerage firm.

Do make an investment, even if it is small. With this, one can take a good advantage of compounding from early stage. Don’t take any emotional investment decisions and make sure to do the needed research when you are selling or buying any stock.

Always do diversify. Make your investments in those sectors that are not at all correlated. Investing in more than 3-4 sectors ensures low risk in your portfolio. Do not over invest and always set a budget.

Buy shares when they are at the low prices. Do your research to check if the stock prices would increase or not and then invest. Don’t listen and implement all that you hear. Do your own research first even when the news is from a credible source.

Do create your core holdings as these act as the pillars of one’s portfolio. Make sure such investments are made in the companies which have a low risk. Don’t get greedy and it is important to know your winning and losing stocks. Taking an unexpected loss can be hard at times but be sure that you do not keep losing money due to greed.

Always know the risk you can take. It is wise to invest your funds in those companies that have low risk. If you can take risk, invest in high risk companies as they fetch good profits. Don’t expect to always buy low and sell high as it does not always work.

Do pay extra attention to the trading fees. More number of trades can at times eat up your profits and buy and sell shares only when you need to do so. Don’t pay anything extra for tips for research oriented material. If you wish to know how to invest in share market, make use of free and reliable resources that can provide you with crucial information. A number of websites update live prices of stocks and the latest news associated with the same. These websites also have detailed statistics about all that you need to know about investing in stocks.

Always pay attention to the tenure of your stock holding. You need to know that there are different rates that you need to pay on the profits and these are dependent on the stock holdings. Never buy a stock and forget about it with a hope that it would give you returns one day. Keep yourself up to date with the latest news of that company and take a decision on your investment accordingly.

The above mentioned are some do’s and don’ts when you are thinking to invest in stock markets. If you are new to stock market trading and investing, and need assistance, do take your time to research on the stocks you wish to trade.

Do remember that research and patience are the two most important factors that can help traders with successful trades. Study the price movement of the stocks based on fundamental and technical analysis before you buy the stock as this helps to take a position at the right price levels. This way you can be sure of a successful trade.
 

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Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
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