Investing in stock market today is no longer about mystery and suspense. It is a daily routine business for big and small traders who are very much aware and updated about what is happening in the share market. The investor has now attained the image of a day trader, trading hard to take advantage of every single market movement, from the comfort of his office or home, at any corner of the globe.
Traders now want quick result that is profit; and do not want to lose the profits when they re-enter the market. While investing in stock market, keeping the volatility of the market situation in mind, always go for a diversified portfolio, with your investment spread over different types of stocks. This strategy has been known to be used by all successful investors and is very popular among all traders, big and small.
Experts also advise never to hold on to a stock. Everyone will agree that buying stocks is somewhat easier than knowing exactly when to sell. Interestingly, very few people know when to sell off a stock to carry home maximum returns. Either they sell off too soon and miss out on greater returns or they just hold on to them in the hope that prices will soar further and ultimately carry home losses by holding on to falling stocks.
In order to decide when best to sell off your stocks, you should first rid your mind of all the negative emotions that can affect your trading decisions. Emotions such as greed, fear, panic, nervousness, and worry all affect your investing decisions adversely. You generally buy a stock with the intention of selling it off at a profit in the near future. To accomplish this motive successfully, you need to put in as much effort and energy in planning your exit strategy as you had done in your initial researches while choosing which shares to invest in.
Owning shares or stocks is partial ownership of the company. Keeping the winning strategy in mind, choose shares of reputed companies even though they might come expensive. People often commit the gross mistake of throwing away money on sinking stocks hoping that they would revive. These stocks might come in cheap but also sink totally very often taking all your investments with them. Such losses are difficult to recover.
There is no perfect price or the most opportune time to go in for a particular share. More generally speaking, there is nothing called the correct price for buying a certain stock. You need to exercise your alertness of mind and invest with expectations that markets would come up with a new boom and that the stocks that you have invested in will go up in value.
It is better that you start off with low-risk securities. These stocks might not be giving you high returns but will definitely give you steadier and relatively more assured returns. Choose your investments so as to minimize your risks through serious losses. For example, with these types of low-risk investments you can expect returns of something in between 50% and 75%, but at the same time your losses shall never exceed 25%, which is a fair enough deal for beginners.
In order to protect yourself from getting totally bankrupt, you need to have a clear picture of the worst-case scenario and ways to recover. To begin with, you should first of all decide how much you can afford to lose. Then keeping in view the total amount in your portfolio, you should proportionately scale down your investments. No matter how much money you allocate in a single transaction, the total money invested should never exceed the mark that you have decided to risk.
Your investment goals should be clear and uncomplicated. You should have a fair idea of how much returns you expect and should have effective strategies in place to achieve those goals. Let not the plethora of investment information through websites, books, magazines, portals, news, and media channels complicate your simple philosophies based on common sense.