The lure of making easy money always draws investor’s attention towards stock market trading. However, the process of stock trading is not as easy as it seems to be. For successful stock trading, investors are required to have a sound understanding of the market.
Knowing fundamental analysis and technical analysis should be on their priority lists as it enables them to make a potential return in minimum time. If not, then instead of generating any profit, investors are most likely to suffer huge losses in the stock market.
- Stock Market Is Not A One Day Thing
As the stock market giant Warren Buffet said; the money in the stock market is not built in a day. Preparing a strong portfolio may be even tougher. It requires a lot of patience, adherence to make successful money in the stock market. He further said an investor needs to give some time to his stocks to get compounded over the years.
The wealth of an investor is built over the years and so is the world-class company. For a successful investor, it is required to develop the appetite to digest the short term losses. Firstly investors need to identify the quality stocks which can provide them with long term gains.
Secondly, do the fundamental analysis and technical analysis of a stock as it gives them a clear idea about the past performance of a stock. Plus the investors will also get to know the future trend of a stock according to market predictions.
- Follow the Value Rather Than Price
According to Philip Fisher, author of Common Stocks and Uncommon Profits once said, the stock market is filled with the investors who only run behind the price rather than the value of a stock. For a smart investor, it would be feasible if he chases the value of a stock as it enables them to identify the prospectus of the company, sustainability of its products/services, and the ability to generate capital to meet the future demands. The growth of a stock depends on its potential earnings and the company’s ability to execute it.
- Invest In Future
A smart investor is the one who has the potential to think and invest in the future. Mature markets with vested features eventually phase out and are often replaced by high-quality products with upgraded features.
Nokia, who once was the market leader of the mobile phone company couldn’t hold the smartphone wave and ultimately lost out to the top upgraded companies such as Apple, Samsung and Sony Ericsson.
- Time the Stock Market
It is extremely important to predict the stock market price before entering the market. With time to market, investors can lose their hard earning money in no time. Many experienced investors give advice not to time the market as no one has done with success. This is because no one can accurately tell the top and bottom prices of any stock.
- Maintain a Disciplined Approach For Investment
If you look at the history of the stock market, you will get to know that even the best bulls in the stock market had given a bundle of panic movements to investors. Due to unpredictable market trends and volatility, many investors had lost the money even if the market experienced a bullish trend. However, all the investors who had maintained their disciplined approach during the market ups and downs, have generated greater returns.
If you are looking for long term stock market returns, it would be ideal to have a systematic approach for investing.
- Plan, Analyze And Conclude
Planning before investing is extremely important as it enables investors to get a clear insight into stocks such as which stocks are worth buying and which are not. After the successful accomplishment of a plan, one must analyze the structure of the stock market along with the company, an investor wants to trade-in.
Analyzing the stock market includes studying the stock market in-depth, technical analysis of a stock and time to buy or sell a stock in the market. Once an investor goes through all the aspects of the market, they are ready to start trading in the stock market.
- Take Your Losses Quickly and Your Profits Slowly
It is always said that the first loss is the smallest loss in the stock market. Many investors continuously invested in the companies which are making a loss hoping that someday the same company will provide them outstanding returns. This is not a winning strategy.
No matter if you are a trader or investor, he must be able to take fast decisions when continuous losses are identified. Such errors are made by experienced traders also. Therefore, it is better to understand the losses rather than understanding the profits, as losses will help you to understand the market more clearly.
The Bottom Line
Investing in the stock market may provide you with potential returns if done carefully. Entering into the stock market without having proper planning may always incur a great loss to the investors. Therefore it is ideal to make your homework first before stepping into the stock market. If you are a newbie or a professional who is trying to retrieve attractive returns from the stock market then Swastika acts as a one-stop solution for you.