Before you get into the stock market, here are few tips you should always have in mind so to avoid regrets and so that you can be better poised to making profits.
1. Have an emergence fund.
You need to have an emergency fund before venturing into any sort of investment. An emergency fund is an amount of money you should set aside in a safe place or in an account where it can be readily accessible in times of emergencies like loss of job, or any other major emergency. Financial experts advise that your emergency fund should be should be worth at least three to six months of your monthly expenses. This money is intended to be a form of a rescue fund which you can use to support yourself before you get another source of income should there be a loss of job.
2. Have a goal for getting into the market.
This will guide you and help you to know when to buy and when to sell and to make other useful decisions. Some are in the market for the long-term while are some are in it for the short term. It all depends on your goals. Before you get into the market, before you start buying develop a goal. This will help you not to be influenced by other people’s decisions, because you know what you are doing and why you are doing it at any given point in time.
3. Don’t trade with all the money you have.
Trade with your spare money, if you are a beginner. As you get more skilful you can increase the amount you invest in stocks. Don’t borrow money to invest in stocks.
4. Invest with what you can afford to lose.
As a beginner don’t your focus shouldn’t be on making too much profits, but rather on becoming a better investor. Your focus should be on how to learn the art of growing your investment. Therefore, use small amount of money to test the water, especially if you are a newbie in the market.
5. Be committed to getting knowledge and improving your investing skills.
The more knowledge you have about the business the better your chances of making the right decisions and making profits as well. The key to making money from stocks is usually knowing the right time to make the right decision and having the boldness to act on that decision.
6. Be determined and persistent.
Settle it in your mind that there is always a possibility of losing money, as with any other business. Don’t pull out your funds just because your stock is depreciating in value. Leaning to invest doesn’t happen overnight, it takes time and effort to become successful at it.
7. Concentrate on a few, high-quality stocks.
There’s no need to own more stocks that you can monitor. To make more money, you have to buy the very best companies at the right time. Don’t buy too many stocks more than you can keep track of and monitor.
8. Don’t get emotionally attached to your stocks.
Too much emotions lead to low financial decisions. Stock aren’t your love ones. They are only a form of investment and a vehicle to achieve your set financial goals. Therefore, be bold enough to sell off and path ways with a stock that have made considerable profits that compliments your goal for buying it.
9. Don’t be too greedy or too fearful.
Greed and fear are the two greatest reasons why people fail in almost every investment. When you have made a reasonable profit and you goals for keeping the stock has been realized don’t allow anybody including your broker to prevent you from selling a part or even all of the stock and cash in your profits. Don’t allow your greed to stop you. Thinking you will make more money. Also, don’t be afraid to buy stocks that others are not buying when you have made your research and found the company stocks to be good at that time.
10. The more you invest the more experience you will get and the more you will be able to develop your winning trading plan.
You have to invest before you can develop your investing skills practically. The more skilful you become in the trade, the better you will discover what works best for you and this will help you to develop your own unique investing plan from your wealth of hands on experience from the market. When you have found out your winning investing plan, please stick to it. Stick to what works best for you, because we are all unique. What works for me may not work all the time for you.
11. Always pick stocks from the leading industry groups or sectors.
Always be associated with the winners in any sector you want to get into. Their prices may be high, but they have more potentials to make you more money that the cheap stocks.
12. Price of stock don’t go up by accident.
They are basically affected by the number of buyers and sellers. Or better still, by the forces of demand and supply. If more people are buying the products of the company, their stock value is expected to go up in value.
13. Sometimes it may be better to buy high and sell at a higher price as opposed to buying very low and selling at a higher price.
Low priced stocks in any industry groups are not always that way for nothing. There is always a reason for that. Unless you are very skillful in the trade, always associate with the winners in any industry group not minding too much that their stock price may be a lot higher than others.
14. Invest long-term.
No matter how good you are, you can hardly beat the stock market all the time. No body does, including the best professionals. Getting into the market with a long-term mentality gives you a better chance to beat the market. If you are not ready to keep your money invested for at least 5 years, don’t put your money in stocks.
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