Tips to avoid losses in stock market
Everyone wants to invest in the stock market and earn profit, but due to lack of correct information about the rules and precautions of investing in it, most either do not invest money or even invest it for a very short time. The stock market is a very good place for investors to make profit, but if some precautions are adopted while investing, then it can be very beneficial keeping the risk of loss away. Here are some beneficial investment tips for small investors:
It is more beneficial to invest money for the long term: Many small investors are often very nervous while investing money while sharing investments in the stock market. They are at risk of losing money in the ups and downs of the market. In such a situation, they often invest money for a very short time. Many small investors invest money in the morning and sell it in the evening. This is wrong. This is the biggest obstacle in making you big profits. Most of the small investors buy shares in the morning and sell them by evening taking advantage of the increased price. In this way, you can definitely earn a small profit on your investment, but for big profit, you have to make the investment period longer.
Mr. Gupta bought 10 thousand shares of Infosys and Wipro on Monday morning. By evening, seeing the share price close to 14 thousand, it was sold with a profit of 4 thousand. On the second day, he bought shares of that 14 thousand and sold it for 20 thousand in the evening. Similarly Mr. Gupta was happy with his share gains. By putting the profit earned in the stock, he was earning even more profit than that. Similarly, in 7 days, he made an amount of 10 thousand to one lakh, which was put back in the stock for more profit. Suddenly he was shocked on Saturday evening, his capital of 1 lakh was sunk. Mr. Gupta used to buy shares worth less than his increased amount every morning and whatever profit he got in the evening, he could consider it as profit, sell it and then buy more shares of lower value. But that day his maths turned upside down. Actually Mr. Gupta should have kept his stock for a long time. If they did this, then along with the increasing share prices of the company, their share price would also increase. Even if the share price fell in the middle, they would have increased after some time. In this way, by investing for a long time, they would have avoided even this daily mental exercise and today they do not even get into this trouble.
Invest the same money which does not work for you for a long time: It is seen many times that investors put the amount used for their important expenses in the stock. In such a situation, they can neither keep it in it for a long time nor can they bear the loss in it. For such investors, investing in shares is a very risky deal. If there is profit then it is fine, but the situation of loss proves to bring mental and financial unrest for them. That’s why investors should never invest the money they need. Invest such money, which you can keep in the market without worrying about profit or loss.
Don’t bet, trading is not a gamble: Many small investors think of stocks as a game of chance, while the exact opposite calls for a strategy. An investor should have information about which company’s share you are buying, how is its market position, what has been its position in the stock market for some time, etc. Buying shares like a gambling game just by looking at the low price and expecting profit from it can give you profit for some time. But due to ignorance of the market and lack of information, this trick cannot be successful for long. The result of this will be a loss in share investment. Therefore, before buying shares, the company whose shares you are going to buy, must study the current and past position of its shares in the market.
When to Hire Professionals for Trading: Many investors take the convenience of trading professionals due to lack of knowledge or time. There will be plenty of stock professionals in the market who provide the service of investing your money in the right place and in return you pay them some fees. But in many cases it is seen that stock professionals take advantage due to lack of knowledge and awareness of the investors. They invest the money of investors in many places for their own benefit. Where the investor would have made a profit of 1 lakh, they only show a profit of 40 thousand. That is why it is very important that you do not get restless by hiring trading professionals. Where are they investing your money, how is the company in which you are investing, how is its position in the market, what are the current conditions of the market. That way they won’t be able to lie to you.
These are all very important facts that every investor should keep in mind, especially small investors. But apart from this, there are many such things which are very important for stock investors. For example: You should be aware of some professional terms of the stock. What is stock market basis, how does it work? Investors should be aware of some official rules of buying and selling of shares, process of viewing balance-sheet etc.