The greed of earning quick money attracts individuals to invest open-heartedly in the stock markets. However, similar to any other field, making money in equities isn’t a piece of cake. It takes a great deal of patience and market research to excel in the shares market.
Also, the volatility factor in the past few decades has left traders in a state of shock as they are in a difficulty whether to put in more cash, hold or sell in this situation.
While there is no fool-proof method that can ensure 100% success ratio in stock markets, you can still follow the below listed tips in order to save yourself from losing a big amount of money while trading with online stock brokers:
Make Your Own Decisions
There is no denying the fact that most of us get influenced by the actions of others. Especially, if they’re doing really good into their respective fields. However, sometimes this herd mentality will cause more harm than good to our trades.
Needless to say that you should avoid to blindly follow your peers or acquaintances as this approach is bound to backlash in the longer-run.
Do Thorough Research on Your Part
In-depth market research should always be conducted before investing your hard-earned money into stocks. Even if you’ve acquired the services of the top online stock brokers, you should still take interest in the overall process.
Keep in mind, when you invest in stock, you’re actually investing in that particular business. Thus, make sure you gather complete details about what specific business the company is in.
Never Try to Time the Market
This is one thing that even the most experienced and professional traders don’t do. Yes, you got it right. Never try to time the futures market as it may significantly increase your chances of loss. According to Anil Chopra, CEO, Bajaj Capital, one should never make an attempt to time the market as no trader till date has successfully managed to do so.
Follow a Systematic Approach
It has been observed that even stocks that are likely to increase in value have shown downturn. The market fluctuations has certainly made investors lose lots of money. However, traders who follow a systematic trading approach from start till the end have been witnessed getting greater returns. Make sure to invest in the right stocks and have patience to hold them till the right time arrives.
Many traders have been facing losses in shares markets due to their incompetency to control their emptions, especially greed and fear. When the market is showing a bullish trend, the appeal of quick money is hard to resist. The greed factor increases when traders get to know about amazing returns being generated in a futures market and that too in a relevantly shorter span of time. This gives rise to speculation. Many times, investors purchase shares of unreliable companies or establish heavy positions in the market without actually comprehending the risk-reward ratio.
The result? Instead of generating any reasonable returns, they ruin their investments. Similarly, when the market is showing a bearish trend, traders usually get confused and immediately start selling their stocks at lump sum prices. Hence, greed and fear are two dangerous emotions that can literally ruin your trading business if not handled with care.
Diversify Your Portfolio
No matter how good your stock broker is, you can’t expect to earn optimum returns unless you pay attention to your portfolio diversification. As an old adage goes, never put all eggs in a single basket. In the same manner, never invest all your money on same assets or securities. By diversifying your investment portfolio, on one hand, you augment your chances of earning from different sources and on the latter minimize associated risk.
That’s perfectly okay if you’re hoping to achieve real-time success in record period of time. After all, you’ve decided to put in your hard-earned money into stocks in hope of getting substantial returns. But, you could be heading to trouble if you’re having some unrealistic objectives for yourself. For example, many shares have produced over 50% returns during the favorable market conditions. However, it doesn’t necessarily mean that you should always anticipate similar type of profits from the futures market.
Always Invest Your Extra Money
At this point, you must have got a clear understanding about stock market volatility. Thus, it’s recommended that you should only invest your extra money into the trades to stay safe.
In today’s fast-moving world, any significant incident happening in any segment of the world directly or indirectly impacts our financial markets. Thus, it’s important that you keep a strict eye on your portfolio and make appropriate adjustments as needed.
Apart from selecting a credible online stock broker, it’s also important that you do your homework and pay attention to the above-listed tips to stay ahead of your trading game.
Happy & safe earning!