What are some tips for trading in the stock market?
Tips for Trading in the Stock market are explained to you through some points.
Keep these things in mind when buying and selling shares.
- Learn First – First Learn
Never jump into the stock market without knowing anything. First understand the stock market well then come into it.
Give yourself time to learn, read the business related newspaper, understand the business plan of the companies, learn to read the balance sheet, get to know P / E, EPS, ROE well then invest in a Share Bazar.
- Long Term Investment is the best
You should invest for a long time in the stock market. It is sure to be profitable. Intra-day trading can make more money in less time but there is risk in it. This can also cause you loss. Therefore, do long term investment only.
- Buy what you know and understand
In the stock market, you can buy the shares of any company, but you should initially buy the shares of the same company that you know, that is, the products of which are used in daily life.
For example, you will be able to understand more the company that makes Maggi, oil, biscuit etc. whereas it takes some time to understand a company with hardware manufacturing, software, web development, etc. Invest in the company whose business you understand first.
- Set a Fixed Price
Always set a fixed price for your stock to sell shares. For example, you have set a target to buy a stock at a price of 1000 thousand and sell it, when the share price will be 1300, then we will sell it. As soon as your share price reaches the target price, you give it a bench.
- Do not buy too many shares at once
Do not buy too many shares of one kind of company at once. You should buy shares of companies from many different sectors in little by little. You can increase the limit of your stock on weekly or monthly basis.
Also Read more Tips for Trading in the Stock market
- Choose Good Company
You should buy Equity (shares) of a company which is financially strong, and also see how its management is. Because the company which is financially crippled or who is worried about its management, the chances of decreasing the value of the share increase.
- Create a Risk Profile for Portfolio
Investing on the stock exchange is risky, so you must make your risk profile. In this way make sure how much risk you can take.
Most brokers give you the option of stop loss order. This gives the advantage that as soon as the share price starts to fall, then your stock is automatically sold by your broker at a certain price. This saves you from taking the loss.
- Research and Planning
Do research and deep planning before buying any company’s stock or before investing money in the stock market. Keep an eye on the market, look at the past records of the company whose stock you want to buy, look at its management, also consider any political and social changes that may occur in the future. Keep watching the market slowdown or boom.
- Invest in Different Sectors
Do not spend all your money in a single type of business. You should invest your money in many types of companies little by little.
If you invest your earning money in the same company, then it is possible that sometimes you will get more loss or more profit. It depends on the profit and loss of the company.
- Put additional money into investment
While investing, keep in mind that you should invest your extra money in the stock market.
- P / E Ratio (Price / Earning Ratio) – What is P / E Ratio
P / E ratio is how much you will earn. This requires the most attention. To know P / E Ratio, you must first extract EPS (Earning per Share). It extracts the net profit by the number of shares.
Suppose a company named AB has 1000 shares and its net profit is 1 lakh, so in this way its earnings on one share i.e. EPS would be 100 rupees.
To remove P / E, divide the market price by EPS (division). For example, the market price of a company AB is 500 rupees and EPS is 100 rupees, then its P / E will be 5 rupees.
- Do not let your Emotion dominate
The fear of loss in the share market and the greed to let the stock rise even after the target price can put you at risk. So, work with your intelligence, stay away from greed and fear.
- Do not let time pass by hand
This is an advice that if you ask for advice related to stock market from any financial planners, you will give it first. You should not waste time during the purchase and sale of shares.
If your stock has reached the target price, then bench it quickly. Don’t wait for the stock to rise further. And if your stock prices are decreasing then don’t wait that after some time its prices will increase again. By doing this the damage is minimized.
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