Stock market trading: The internet revolution was impressive. It connected the whole world and the market with a small device, i.e. a mobile phone. Moreover, this little device, along with an internet connection, can do wonders. The importance of both things is increasing at an exponential rate. Furthermore, you can also take benefit of this revolution. This device can make you a millionaire (or even a billionaire). How…? Keep reading to know!
Some time ago, if you were to invest your money in something, then the only options which came to people’s minds were gold and real estate. And, if by any chance, someone thinks of stocks market, they were brokers and their close relatives (through their broker relative).
But the times have changed now, and you don’t need a broker to get into stock marketing. Like many investors, you can also open a stock trading account and start buying and selling shares.
But, this market is unpredictably volatile and risky. Thus, one needs to complete the homework first to start stock trading. By homework we mean some things here, which everybody should know if he/she wants to be a successful stock trader. Below is the list of those things, a.k.a. tips.
7 Must-Know Stock Trading Tips for Newbies
- Knowing is the Strategy: Homework always needs to be done, whether you’re a student or a stock trader. If you are serious about being in the stock market, then you have to keep up with the market, finance news, and events that in any way might affect the market. Read Books, articles, and reliable websites to keep yourself updated. The more you’ll know the market, the more easily and quickly you’d be predicting the market before anyone.
- Don’t Be Afraid to Start Small: As a beginner, you should be taking a small leap. Investing a large sum over different portfolios might not be a rational choice. Choose one or two companies, you’re quite familiar with, and start trading. Tracking and analysing them would be much easier for you.
- Be Wary of Petty Stocks: Unless and until you are sure about a small stock’s growth, don’t invest your precious money in it. And, if investing, do proper market research, and then spend. Because you never know when these stocks get de-listed by regulatory authority nor we can trust their authenticity.
- Think Practical: It would be next to impossible to win over all your investments. Even the best day traders win about 50-65% of their spending. Thus, it is essential to be practical and do not get demotivated by some losses.
Just make sure that you understand all the methodologies of buying and selling. Also, the risk associated should be limited to a specific limit on every stock you trade.
- Be Disciplined About the Plan: The most crucial thing every successful trader has in common is they stick to their plans. Develop a strategy that works best for you, and follow that with utmost dedication. Don’t fall for emotions such as greed and fear, when trading. For example, if you have decided that on a particular share after a net loss of 20%, you’ll sell it. Then, you must sell it and avoid false hopes.
- Don’t Invest All your Funds: The only tip or advice which might be common in all our articles. We reiterate every time – do not ever invest all your money. The ideal percentage would be 10% of your total income. Also, never spend the money meant for near or must pay expenses like bills.
- Think Long term: People want money real quick. They don’t understand the point that stock trading is not an overnight rich-making instrument. When are you expecting returns? Tomorrow? Then, sorry to say, but the stock market is not for you.
Share market is very volatile, and there are times when people lose money today but over time their share prices surge. Thus, take decisions for the long term.
So, these were the best tips for someone who wants to start stock trading. These tips, given by experts, working in similar fields for years now. But, what if you change your mind and decide that you’re not good with stocks and would trade in crypto. Will these same strategies work there, or do we need something else. Read and know that thing by yourself here.
But, for shares just keep these amazing tips ready at your fingertips.
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Terminologies Relating to Stock Market
- Bull Market: A market situation where prices rise expectedly, probably more than 20%. Reason? Maybe because bulls generally hit in an upward direction.
- Bear Market: An exact opposite of the bulls market. A situation when the financial instruments and market prices would hopefully fall. Just like the bulls market, when the fall is beyond 20%, you can state it as a “bear market”. Why bear? Find the reason for yourself! (Homework :P)
- Market Crash: Don’t misjudge it with bears market. It is a situation when the market falls beyond 10% suddenly, to be precise in a day or two.
- Market Correction: A fall but a positive one. A situation where the also market falls beyond 10%, but in a week or a month. Investors positively take this fall before the market will gain high confidence.
- IPO (Initial Public Offering): An IPO is a proposal by a private or a new company to buy its shares because the company is going public. Also called ‘going public’, this offer is just before a company is getting listed on a stock exchange.
- Blue Chip Stocks: These are stocks of a very reputable and prominent organisation. These companies have established their names in the market by years of consistently good performance and providing sound dividend earning to their investors.
If you got even a single doubt about why we included this terminologies section here, then knowing and understanding terms is crucial in the stock market. You will not only avoid confusion and doubts but also be a better and more smooth trader. You might take time getting familiar with them, but when you do, it’ll be a part of your life.
One thing we always say is that the stock market is not a race; you just cannot compare anything with anyone. Starting small is the best way to begin the stock market.
Every stock market is of a different type, and you have to make a choice in the direction you want to head. It doesn’t matter what your goal is, whether you wish to earn fast, trade at no risk, make money in the long term, etc., there would always be a fund for you.
Just do the analysis, complete all your homework, and jump into the game!