Stock market tips, day by day investors are getting increased and most of them are beginners entering the stock market without having any basic knowledge. This resulting in a thin success rate, as an estimated not even 3% of the beginners are making profit more than a Bank FD. In India as on date, only 3% of the people invest in the stock market (source: CDSL)
The stock market is having a huge potential to leverage your surplus money and to achieve financial freedom if it is done in an organized manner. On the flip side you can also lose all the money if it is done unplanned.
Here is a list in Stock Market Tips: 10 Things to read before investing in Stock Market:
A blind jump in trading is always risky:
Never get carried away by seeing people posting in social media or your friends making big money in stock market with little capital. By taking a note of them you may intend to invest in stock market even though you are not having enough knowledge on the basics of investing in the stock market.
It is always a better way to figure out your financial goals and to learn the basics to advanced concepts before entering in to stock market.
Do paper trades or dummy cash trades to gain confidence, experience and analysis while starting your journey and there after begin investing in stock market in real time.
Do not assume stock market as your money making machine
Most of the beginners in the stock market in India become greedy after getting influenced by the content available in internet watching some fortune investors. Stock market is not money making machine that starts delivering you the money as soon as you invest.
It is also true that few of them have become so successful in earning millions of rupees in stock market. The reality is these huge earners take money from the naïve investor coming with little capital.
Do not forget the fact most of the people lost money of not having proper fundamentals of stock market.
This perception as money making machine should be removed. Investors coming to stock market needs to be careful and come with proper knowledge and start investing accordingly.
Learn concepts from basics to advanced to handle your self
Before diving in to the stock market making your initial investment it is always better to study a course in stock market.
We spend three to four years for getting graduation in order to secure a job having initial salary of INR 25k per month. Imagine the potential in stock market having potential to earn financial freedom. So learn your basics in a well approached manner.
The below are the areas you need to be knowledgeable before entering in to stock market.
Financial study of the company, technical terms such as market capitalization, PE, Earnings per share, Return of investment.
Need to make requirements for stock market such as having a Demat account (stock broker : zerodha, etc.), trading platform, initial capital and computer system or mobile for trading.
Make a watch list of the stocks
Take trade based on the chart analysis enriching with Technical and fundamental analysis.
Follow global and local cues. Understand economics of the country parameters like GDP, Inflation, Crude oil price, Industrial data and major events affecting the particular stock or industry.
Best way is to invest only your Surplus funds in Stock Market
This is one of the important stock market tips, Stock Market is a business that you can get profit or loss on your investment. Most of the beginners invest all the capital in the first go and lose major of their capital in their portfolio.
It is always a best practice of investing your surplus money in the stock market so that you can develop patience for investment and not tend to lose your capital as a trader.
Do not invest your essential and emergency funds in the stock market as it is not a stable resource during the need.
Avoid Borrowing Money / using Margin money in Stock Market
Never ever borrow money or use margin money for the sake of trading or investing in the stock market. We always tend to lose our control thinking in one-direction about movement of the market. It is also to be taken note that the probability of successful trades is not even 30% and need to plan our portfolio accordingly.
Going for margin money or margin money makes one anxious and to take wrong decisions resulting in major loss or ruining capital in less period of time.
Be Unique and avoid herd mentality
We always tend to go and carried away our decision getting influenced by the information given by friends, neighbours, social media stock influencers. There is always a speculation in the market. We need to analyse the situation with the knowledge and take suitable actions in order to achieve success in stock market.
Manage your Portfolio diversifying fund allocation meeting your Target
There is great saying we should never invest all the eggs in one basket. Never place all your capital in one stock or one investment instrument. Always have a diversified portfolio allocating 60% in the safer instruments such as bank FD, Mutual fund and bonds achieving a ROI of 12% and balance 40% in stock market with diversified stocks and target for a better ROI.
Follow Systematic Investment in a disciplined manner
In order to be successful, we need to invest in a systematic approach as no trader can enter in a right moment in dips or exit on tops. One should be careful while investing timely during dips in order to average the stock price and to achieve better profit
Don’t Carry your Emotions in stock market impacting your decision
Most of the beginners become greedy at times and also take higher risks losing most of their capital. 90% of the people carry emotions and take decisions quickly under panic situation. The psychology of trader or investor should be disciplined to calculate the risk before and hand and should a exit strategy to mitigate the losses
Set your Goals realistic and make it simple
Having expectations to make money is not wrong but one should be realistic while setting the targets to reach the financial goals. Many stock doubled in an year in recent time. It doesn’t mean that you can set target of the same.
Strategy of entering the trade during over sold region and exiting during over bought region is highly important for achieving successful trades.
Review periodically about the returns made and set the short fall or excess buffers available in the set target.
Conclusion for Stock Market Tips:
Above stock market tips if followed by beginners can yield results in a more optimistic manner.
Please check the below video with more detailed illustration and examples having detailed stock market tips.
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