Many people consider stock market as a place of gambling and advise others not to enter in that field. People often speak about the losses they made in the stock market. When the losses are substantial they speak more negative about the market. But seldom any one speak about the substantial losses they made out of stock trading. Trading in stock market is an art. Stock market is like a battle field. A warrior who does not know the strategies to be adopted at different situations loses his life in the battle field. Essentially any one operating in the stock market must know the fundamentals of market operations and observe certain rules.
1. Do not take risk more than what is affordable
2. Market has no memmory, hence it responds to the current information available to it.
3. Do not blindly believe on opinions and advices, always study the fundamentals of the company before investing
4. Never be greedy and aim at huge profit. Market always punishes greedy. Little drops of water makes the ocean
5. Avoid speculation. Taking positions without holding asset is very dangerous
6. Do not love any particular scrip. Try to book the profit when the price reaches at the peak and shift the investment to another scrip.
7. It is better to invest in highly performing scrips, though the price may be higher, than investing in low priced scrips, if the performance is low.
8. The market is highly sentimental and reacts to events quickly. Hence follow the events and take appropriate positions.
9. You are the best judge of your portfolio. Do not blindly allow somone to manage your hard-earned money.
10. Learn the art of trading from experts in the field. You cannot learn trading in a day. There are so many people conducting one day seminars for giving training in trading. You need at least 60 to 75 hours of trading to understand various aspects of trading and how to develop proper strategies.
11. The market conditions change every day and therefore there is no ideal strategy. What the books and articles state are only examples of strategies and you have to develop suitable strategies based on the prevailing market conditions.
12. Read at least one financial daily every day to know the happenings in the financial world and follow the events to protect your investments.
13. Try to avoid investing borrowed funds in stocks
14. Give proper attention to the shares in which you have stake
15. Study well about the project, promoters, the success rate of the projects promoted by the promoters, the product and its potentiality etc. before investing in new companies.
16. Always study at at least 3 consecutive years' financial statements of the company in which you plan to invest.
17. Technical analysis is an indicator about the potentials of a scrip. Hence learn to analyse technical charts. However, do not blindly believe on technicals because technicals are built on the past data.
18. Try to learn from falls.
19. Remember Abhimanyu lost his life because of overconfidence.
20 . Ensure that you exit the market before it is too late.
Believe me, stock market is highly fertile. You need to learn the art of trading to reap the profit of trading.
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