Six Rules Every Investor Needs To Know

The stock market is like a casino, in the end, some win over the losses of someone. That doesn’t mean you can can’t walk away with some healthy winnings. There are no clear ways to win, there are, however, some rules which, if followed with discipline, can lead to good returns.

1.    Do Your Research

The world of share markets have a language of their own. You need to learn the basics before you begin trading. What are shares? How does stock market work? What’s a bull phase or a bear phase? Such questions need to be answered and understood. It will help ease your first few weeks and not lose money.

2.    The importance of a broker

You cannot trade on your own, you need a broker to do that. There are two kinds: full-service and discount. While the first one is traditional, the second one is all about online. Pick the one you are comfortable with. Check them out and make an informed choice before you pick one. A broker plays a vital role in your quest make profits out of the share markets.

3.    Invest in what you understand

In the market, there is always a wave. You will see a period when FMCG shares are doing well and soon it’s the blue chips companies which are reaping the profits. That’s all well and good for the companies, however, you need to know everything about a company before you invest in it. If you aren’t able to understand how a company works and its balance sheets are complex, don’t invest even if they are doing well. Always invest in companies with simple workings.

4.    Spread out your portfolio

Markets are volatile and there is always a chance of a sudden rise or slide. You never know the IT Company you invested in sees a sudden fall in its share price because of something happening in America. Therefore it’s prudent to spread out your investments. Even if 1 or 2 industries perform poorly, the rest can help arrest the losses and leave you with a decent amount of money than being penniless.

5.    Avoid doing what everybody does

There’s a term called ‘herd mentality’. Don’t become a part of it. If everyone is putting their bets on a certain industry, don’t blindly follow them. Do you research and make a decision based on your readings of the market tends. Many will give you share trading tips about this company or an upcoming trend, never listen to them. You always invest based on your reading and nobody else’s.

6.    Invest with your money

This is one rule which distinguishes a level-headed investor from a distracted one. People trade with emotions as much as they do with thorough analysis. Some win and some lose. To recover their losses or to reap more profits, many take loans or borrow from families and friends; this often results in disasters. Remember to always to invest with your own money.

Trading in the stock markets is a science of its own. If you are new to this, make sure you choose a broker who will help you. Go with Angel Broking. With experienced brokers and excellent research and advice, they are one of the best places to begin your share market journey.