Handy Tips for First Time Traders
Trading in stocks is fast becoming an important way for people to not just save money for their future, but to also supplement their regular income and participate in wealth management. Thanks to the increasing number of financial advisors and trade brokers, this process is no longer as complicated and risky as it was earlier.
Discount brokerage charges in India are quite competitive to encourage more people to start investing and trading and keeping the economy alive all over. So the profits that you make will not be impacted to a large extent by the fees and commissions that you pay. The key is to make the best of circumstances and maximize your profit. Here are some handy tips for one to do just that:
- Analyse the demand and supply factor – When supply is less but demand for those particular stocks is still more, then you can expect the prices of stocks being sold or traded to be high. The reverse usually holds good for assets that are high in supply but low in demand.
- Peg a return – When you decide to start trading, decide what kind of profits you are expecting so that you can accordingly decide how risky you want to be in the market. At the same time, decide that would be the maximum amount you are prepared to lose and stop as soon as you hit that mark to prevent a financial catastrophe in your life.
- Keep Patience – You need to learn how to work the market and understand its cues to be able to make them work to your best advantage. And this level of skill and confidence cannot be reached overnight. You must be patient and forge ahead even after a few stumbling blocks so that you learn to emerge a winner always in future. Another aspect of patience is that trading everyday doesn’t necessarily mean bigger profits. In fact, some of the best traders are patient and wait for their preferred stocks to hit the right note before they work on them. This of course requires careful market monitoring and patience.
- Capital – Trade or invest that much money that you can afford to lose. If you put all your retirement eggs in this basket, for example, the consequences of any form of loss would be quite big in quantum for you. Plus, you are willing to take bigger risks with spare money which can lead to bigger profits, rather carefully trading with your hard earned money that you desperately need to use elsewhere.
- Diversification – Stocks are not the only options. Explore the world of debts, commodities, mutual funds to spread your risks and hedge your high risk in one company’s trading against the superb performance of another in the portfolio.
The most important factor what will determine if you make profits or losses is the way you participate in the trading field. However, people who are trading for the first time or are about to do so should be aware of certain important tips before they begin their exciting new journey. There is plenty to do and monitor when it comes to trading an investing, short or long term.