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.
