Investing in stocks is a game of savings. To run each game, you must know and follow the prescribed rules and regulations. Any violation means you are penalized. The sanction is proportional to the seriousness of the rule violations.
Just as navigation is easy in the calm waters of the sea, besides the in-depth knowledge you have about investing in stocks, the first condition is that you must deal with the issues of buying and selling with a mind. calm. Let it be understood that your emotions have no role to play in the face of the volatility of the exchange. Even in the normal market, they have no role. When you are not in the right form of mind, you are making the business decision at the worst possible time.
Fear and greed combined with emotions is a bad scenario that an investor can create for himself.
Some of the things to consider before trading stocks are:
1. For starters, don’t go with the killer instinct. Watch out for modest returns.
2. Adopt the time-honored tactic of long-term returns. Invest the same amount of money at regular intervals and buy in small batches. Naturally, you will buy more stocks when prices are low and less when prices are high.
3. Take advantage of the services of a broker. Before hiring him, meet him face to face in his office. Have a preliminary discussion about your financial goals. Obtain a copy of the company’s commission schedule. Determine the type of services you need from the broker. You might need recommendations, research reports, and investment advice.
4. Once you have focused on hiring a particular broker, provide the correct information about your goals, personal finances, net worth, and previous investing experience. This will allow the broker to make the appropriate decisions for you.
5. You now come to the pivot point. Who will control the decision-making for your trades? You must expressly state in writing that the broker has the authority to make decisions, if this arrangement suits you. Once this authority is vested in the broker, he will make decisions without consulting you. These decisions will be the best for you under the conditions in force. Whether you take losses or earn profits in a particular trade is not the broker’s concern. Discretion should therefore be granted after very careful consideration when you are fully convinced of the broker’s ability and track record of success.
6. Never invest in a stock you have no knowledge of and avoid guesswork. Know basic financial terminologies and fundamentals of investing.
7. You invest for profit, not to lose money. At the same time, you should know that investing in stocks always comes with a certain degree of risk.
8. The past performance of a business is no guarantee of future success. Don’t make hasty investment decisions on the strength of the intensity of the seller’s appeal. He does his business, please do yours!
9. Beware of catchy phrases often used in stock trading, such as “inside information” “confidential leak” “an acquisition is in sight”, “a dynamic product” etc. by many!
10. Do your best to limit transactions. The more transactions there are, the more commissions you will pay.
11. Don’t focus on just one product. Let your portfolio take care of different segments of the industry.
12. Broadly speaking, there are four types of investment strategies: the fundamental approach, the psychological approach, the academic approach and the eclectic approach. Each approach requires detailed study. Keep your knowledge up to date on these strategies and you may need to modify your strategies depending on market conditions and volatility.
You will gradually develop into a good investor thanks to your experience and your theoretical knowledge. Both are important. Never lose focus and stray from the tracks while investing. Years of hard work and profit can be undone with one bad trade.