Sunday, August 28, 2011

Learn the basic stock investing rules

Some investors say that the stock market investing is a kind of gamble and therefore it is quite risky to invest directly in stocks. However, there are other investors, who considers it safe and make substantial profits by investing stocks. So what is the difference between their approach towards stock market investment that made one successful and other a looser?

The answer is quite simple. In the previous case, investors are inexperienced and have no knowledge of the market. However, in the latter case, investors learn the art of value investing, stock valuation, market analysis and therefore they can time the market to perfection. So if you want to be in the second category, you must learn the basic stock investing rules. However, if you jump directly to the market, without knowing the basic stock investing rules, you are exposed to high risks and cannot profit from your investment. Thus, it is better to learn the art of value investing, stock valuation, market analysis and then begin to make profits from the market.

Based on years of experience of Getmoneyrich team in the field of finance and investment, some of the basic stock investing rules are listed below:

1) The purchase and sale of stocks: buy at a lower price and sell the shares at a higher price. This concept is very simple, but most investors follow the opposite rule. To make a profit from stocks, you should always respect the basic concept. As the stock market is very volatile, you need to time your entry to perfection. Timing is not as easy as it may sound, you need to be an intelligent and informed investor in order to do so.

2) Stock Market News: to achieve the benefits of investing in shares, you need to understand and stay informed about the mood swings of the market. Keep yourself abreast of market news and invest accordingly. You must be prepared to buy, sell or hold depending on the fundamentals of the individual stocks and market in totality. It is very important for investors to manage stock market volatility

3) Stock Analysis: Among the stock market volatility, stock prices can fluctuate up and down very dramatically. It is not always true that if a particular share price goes down then it will not go further and vice versa. Therefore, you should know the trends and also learn how to analyze stock data. Before buying a stock, you must have the answer that if a stock price is falling whey it is falling and vice versa. If the reason of price change justifies investment only then you shall buy or sell those shares.

4) You cannot predict the market movements: The main reason why some investors fail to make a profit is because of their poor attitude and approach towards the market. They believe that the marker is rational, and they are able to determine market trends. However, successful investors are more concentrating on the business fundamentals and avoiding to buy overvalued stocks. If you are buying stocks of companies which is doing good business now and has growth prospects in future and its share is available at bargain price, then you can be sure that there will be no loss. But generally people do not know how to value stocks, analyze business and they just go on trading with ‘hope’ to make money. Ability to time the buying and selling of stocks will only come with your increased know-how about market and you skill to read financial statements of company.

5) Use of Information available on Web Portals: These days the financial results of every listed company is available on the web. These websites provide helpful tools that can help you analyze stocks to start with. They also provide detailed financial results (balance sheets, profit and loss accounts, cash flow statements) which you can access and do your own analysis. These days you analyze every aspect of the market and then make the right decision.

6) Develop your invest rules: Never follow other’s paths. You must listen carefully to what other investors say, but always make your decision. Have your stock analysis parameters which you must use to cross check the fundamentals of each shares before buying them. This is because, most investors want to mislead others. It’s hard to believe but it’s true, they would like themselves to buy low others to buy high. If somebody is ready to buy high, they will sell their holdings to them and make healthy profits.

Follow these simple basic stock investing rules you can reap the benefits of your investment. Your market knowledge, hard work, ability of decision-making and the positive attitude definitely helps you make money. Today, stock investing has become so easy with the advent of online stock trading platforms. For an informed and intelligent investors, perhaps stock investing is the easiest and safest investment option. Simply log into your online account and trade on the web. So what you waiting for? Start investing on the stock exchange today
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