Investors are always drawn into stock market trading by the promise of lucrative earnings. Even though people have achieved success in the stock market, trading stocks is by no means simple. In addition to research with a thorough understanding of the markets, it also requires discipline and patience.
Furthermore, the stock markets have been quite volatile in recent years, leaving many traders unsure whether they should hold or sell the stocks they currently own. In this situation, there isn’t a proven formula for success on the stock market, but some guidelines can be followed to help you earn in the share market. Some of these are:
- Have Realistic Goals: Traders can hope for the best from their investments, but if their financial goals are unrealistic, they may find themselves in serious trouble. Never anticipate the same returns from the stock market, and always set goals that are doable and attainable. When traders have had some big wins in the past, they tend to lose touch with reality.
As a trader and investor, particularly in the world of stocks, you must remember that every day is unique, as is every stock traded in the past.
- Don’t let Your Emotions Overrule: Avoid using your emotions as a guide when making stock investment decisions. Many investors have lost money in the stock market because they cannot manage their emotions, particularly fear and greed. In a bull market, it’s hard to resist the allure of quick wealth, but in a bear market, when prices crash, fear takes over, and traders sell even at significant losses.
- Diversify Your Portfolio: It might not be a good idea to focus on a single industry or invest all your money in mid-cap stocks. Start by diversifying your portfolio by investing in various stocks across industries and market capitalisation. Since each sector has a unique set of factors that affect how well businesses perform, diversifying across sectors or industries can be beneficial if the current economy is unfavourable for any sector.
- Don’t Time the Market: Every investor always hopes to buy low and sell high. However, knowing the bottom or peak in a stock’s history is only known retrospectively. Try to focus on the time spent in the market rather than trying to time it. Many investors are left out in the waiting game while they wait for the stock price to decline even further. Therefore, it is always better to spread out investments at various price points.
- Monitor Your Investments: If you manage a portfolio of investments, you must track how they are regularly doing. While the “buy and hold” and “buy and forget” strategies may be effective for people with a long-term perspective, they might not be very profitable if you hope to make a consistent income each month.
Therefore, when it comes to making the best decisions at the right time, you would be in a much better position if you closely monitored the share market live and your portfolio on platforms such as ICICIdirect.