Basic Rules In Stock Market Investment

 

People invest in the stock market primarily because they want their money to grow and have enough savings for their future. Since we have the so called “inflation rate”, where in the common commodity prices sort of eats the value of our money, we invest in the stock market so that we can earn extra.

If you are a beginner in investing in the stock market, the following advises or suggestions will be helpful to you in learning the trade. There are potential wins and losses in the trade and so, it is vital that you be guided by the following rules:

 

 

 

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Do Not Put All Your Eggs in One Basket

As the saying goes, you should never put all your cash or investments in one market. The stock market has ups and downs all the time. Opportunities are usually open, so be ready for your extra cash.

It is Okay to Take Profits

If you see that one of your investments is growing big enough, know that is perfectly fine to get your profits. The stock market is fast and unpredictable. It can reverse anytime. You can use these profits to actually invest in other stocks and potentially gain more.

Protect Your Finances

Learn some hedging tactics so you will be prepared should the market move against you. Plan ahead for your financial gain.

Know the Events That Can Affect the Market

Do some research about the certain events that can drastically move the market. Equip yourself with knowledge by always reading financial websites or magazines.

Learn the Stock Trade History

Monitor the stock trade history and look for any patterns like the ups and downs of the market. Check for the stock data and the charts. It can tell you of the trend and of how the stock moved in the past weeks, months and years. It can teach you how to plan ahead for the future of your investments.

Use Limit Orders

Another strategy of a good investor is to have trade orders to stop potential losses. Limit orders, if you must.

 

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Be Patient

In investing, you have potential wins and losses which can make one feel greedy and scared. Have the discipline and patience to observe the market and the trends. Do not let your fear and greed take over your logical reasoning.  Never let your emotions take over you which can cause panic. Follow your plan as prepared.

Minimize Costs

As you know, trading in the market can be active and short term, thus transaction costs are important. Frequent trading would mean high brokerage commissions even if things nowadays are done online. Therefore, if you are actively trading, try to look for brokers who will charge you at a lower cost.

 

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Learn the Stock Beta

This so called beta of the stocks can be researched in financial websites. The Beta is the measurement used to know how volatile the market is as compared to the market standard – take this into consideration.

Learn From the Best Traders

Read more about the people who became very good at earning in the stock market. Trading as you know is very risky. So you should only use your extra money in investing.