Should you hold on or sell your losing stock?

Many investors buy stocks for making money and wealth but not all stocks give you good or expected returns. Some fail miserably in their performance. Mr. Raju had many stocks in his portfolio and most of them he realized were bad businesses in spite of bull-run in the market over the last few years.

losing stock

He did not know the way out. Not only he, but there are also many who do not know what to do with those stocks that are in the portfolio which are not performing well.

Many people can be heard saying that stocks they are holding are in a deep loss and what will they get selling it anyway.

Few other grumble that they have a losing stock and will sell only when they get the capital back, and they do not mind holding to it for a long time. They are ‘forced’ long-term investors, as they think they do not have the option to sell it.

Nobody likes to lose

It is true, many people hang on to their losing investments because they feel selling is worse.

Researchers of investment behavior have found that pain of loss is much bigger than the pleasure from gain. Investors go great length to avoid pain. As a result, our thinking when facing financial loss is to encourage ourselves that the stock will ultimately bounce back and will sell when we reach the break-even point.

To pacify themselves people will say that it is an only paper loss as a real loss will be when the stock is sold.

How to decide whether to hold on or sell?

One of the suggestions to these people is if you think the stocks are good then hold on to them if the stocks are bad to sell them and do not think what price you bought them for in the past.

The cost price at which you bought stock does not matter when you do not know what you should be doing with bad stock in your portfolio. What matter is today’s stock price!!! Assuming that it is a good business and you look to buy those stocks afresh today and your anticipated returns from it in the next 10 years or so. If you think you will not buy it today then sell the stock that you are holding. Do not wait for the breakeven point. There may be even a better way to invest your money.

Are you waiting for the breakeven point before you sell?

You should not keep losers in your investment portfolio, sell them instead and move on just as a well-managed store does not keep obsolete goods as inventory.

If you think how much more the stock price will fall from here think that every 90 percent loss started with 10 percent, 20 percent and so on till 90 percent, so as soon as you realize that you have made mistake purchasing certain stock it is better to take loss sooner than later.

We give recommendation tips as to which shares to buy and which to sell. You can contact/communicate to us which stocks at present you are holding which was a bad business and we will suggest an alternate way to out.

Online Trading Tips to Secure Better Returns on Your Investment

Share trading is buying and selling of shares in the stock exchange. When this trading takes place through computers and the internet it is called online trading. For trading, you need two accounts, demat account, and trading account. Traders/investors who wish to trade on their own prefer this type of trading facility.

Online Trading Tips

Discussed here are few online trading tips to secure better returns on your investment.

Start with small capital

Those who are the newbie in stock trading should start with small amount of capital in the beginning. Human beings make mistakes and so even if you suffer loss during your first few trades your trading spirit will not be broken as you would have not lost much right in the beginning. You will gain experience of how the website works and what are the options that are available.

Study stock market

Before entering into the field of trading, one should study the basics of the stock market and features of an online trading website. You should be aware of how stock markets work, its basic terminologies, and types of trades available. If you do not study and observe you may end up buying/selling wrong orders.

Do your own research

One should gain some understanding of fundamental and technical analysis of the company to choose the right stocks for investment. For this you can rely on your own research and mathematical calculations or take help from experienced people in the field. If your trades are based only on impulse, the outcome of the trade will be unpredictable.

Trade only in a few sectors

One can trade in many sectors but it is advisable to stick to those sectors of whom you have knowledge about. By selecting a few sectors you can stay updated about all the occurrences in those selected sectors and that will be beneficial. You can search about news, related articles, financial reports of the companies in those sectors through the internet, business newspapers, magazines etc. in which you are interested. Company news helps in planning strategy and trade execution.

Using trading tools

There are many tools available to help you come to a decision when and what to buy/sell. Few of the tools are charting tools, stock watch list, SMS/email alerts, charts, graphs, high and low, etc. These resources will help you in taking right decisions. These tools give you information whereby you do not trade on impulse or intuition.

Trade from anywhere

Being online and registered you can trade from wherever you are from home, from office, while traveling or even in some remote location provided you have an internet connection!

Choose a good online brokerage firm

While choosing an online broker see to it that his web speed is good and has a good reputation. The available services for an online trading platform can make a difference between financial success/failure. Check for online broker pricing especially if you are a day trader as in the long run it will make a lot of difference in your profits. A good broker will offer resources for education and research.

Online trading will provide you the convenience of trading and few other benefits. We provide trading tips regarding which shares to purchase/sell so as to derive maximum returns. You can contact us on phone, email or by filling up the details which appear on our webpage.

Is stock trading analogous to gambling?

For many trading and gambling, are same in theory but are practically different. One is calculative risk-taking and another luck or chance game. But both offer unlimited potential for profit or loss.

stock trading

While trading most people have the will to win. Nevertheless only a few have the will to prepare to win. So, here are some stock trading tips for you.

Analyzing data

Trading in the stock market is not a game of dice, it involves, apart from other things introspecting the past data that is available and analyzing it. In gambling, it is an ultimate win or loss, but in trading, nothing is ultimate, neither the win nor the loss. Companies are in constant competition with each other to provide better services and bring in new products for better utility. This leads to a rise in their stock prices which earn better profits for the firm.

Reasoning, rationality, and logic

Traders want to invest in right stocks and hence constantly seek the latest information about the company. To predict market trends they perform technical and fundamental analysis and calculate things mathematically. They apply reasoning, rationality, and logic to come to the conclusion which stocks to buy and which to sell. Investors on the other hand judge past trades and then plan their strategy. Where to invest, amount to be invested, and for how long should they hold. Gambling is totally different game altogether.

Entering and exiting market

All trades are first carefully analyzed before buying and selling. Traders know at what level they will enter the market and exit before initiating any trade. They follow the strategy that they have made and are disciplined in it. Everyone knows that the market is unpredictable and the wise investor goes in a planned manner rather than playing with odds. It is due to his discipline and patience that he made a good profit. Trading is not winning the one-time jackpot but it can be a regular source of income.

Calculating before buying/selling

Before trading one should know that he/she cannot win each and every trade. Whenever one trades he should have a long-term approach. Before investing the trader should gain as much knowledge about the company as possible. Blindly buying stocks without calculations and analysis is like betting at the poker game without looking at your cards.

Effects of environment

In gambling no outside events affect the outcome, in stocks outside events like a good/bad monsoon, change of political power, change in government rules/regulations, strike etc. affect market movements.

Planning and learning

In gambling, there is a get-rich-quick perspective which is not suitable in the stock market. Traders look for a plan that provides for a learning experience which in due course leads to success. A trader gains experience even when he loses and using this experience he can gain better profits in the future, nothing like this in gambling.

Risk can be managed

In trading, you can incorporate risk management techniques to reduce loss. Risk cannot be managed in gambling, you win or you lose as simple as that. No need for technical and fundamental analysis in gambling.

We perform technical and fundamentals analysis of the company before providing you with any tips or suggestions. We also study other parameters like political climate, change in government rules or regulations, weather conditions (rainfall), inventions or discovery, etc. before coming to any conclusion to buy/sell the shares.

How to make profitable stock trading strategy?

It is the goal of every stock trader and investor to formulate his own profitable stock trading strategy. Being a serious trader you might have many different trading strategies for different market conditions. You might have also noticed that there is a regular uptrend or downtrend for a certain period of time. Many a time it can move sideways too. One has to implement a proper strategy to make money.

trading strategy

The market constantly changes its behavior pattern and hence your strategy should evolve accordingly.

Your system should define rules set according to market trends, present and the future situation, regarding which the best trading strategy you should use. You can be a day trader and may prefer swing trades or positional trades.

Questions you should answer before preparing a strategy

Basically, your marketing strategy should be able to answer two important questions. First, how to find the best pick for your strategy and secondly how will you trade. Answers to these two questions will be the description of your trading strategy.

On alliance research you will find almost everything you need to trade for your strategies.

Finding stocks to trade

One should use technical and fundamental analysis to find the stock you wish to trade. First, you can use the screener to make automatic pre-selection. Secondly, once you are done with your selection you can fine-tune your selection using individual chart analysis or some other screener. Screen strategy sector wise, industry wise, with both fundamental and technical analysis. Thirdly create a trade setup for the best opportunity you find.

Testing your strategies

Once the strategy is formulated you should test all your strategies before you use it on your trading account. There are various different options available to test your strategy. One can use back-testing tool to back test automatically. You can use paper trades using the MS Excel spread sheet or use paper and pen to note your trades.

Moving on to the next step

Once your strategies start showing positive results you can follow real-time strategy testing with a small amount of money. You can start with 100 – 200 shares to test your strategy in real time. You can see that if your results are nearly similar to your virtual trading.

If trading with small amounts is satisfactory, well you can integrate such strategy into your trading account.

Money management

Money is an integral part of your trading hence its management for every single strategy is a must. The rules can be common for your overall trading system or they can be adjusted for each strategy that you make.

For money management, you should know answers to how much is your risk appetite for every position in your portfolio, how many open trades one can have at any given time, and what will be reward and risk ratio. Your money management strategy will help you to arrive on a figure how many shares are to be bought in a single trade. This way you will able to manage your risk as well as your money.

One should trade only in liquid stocks. These were some stock trading strategies that you can employ and use for profitable trades. For further details, you can contact us.

Trading tips to secure better returns

Many a time people buy stocks on their friends or relatives recommendation to make quick money and wait for days or sometimes months, just to recover the cost. Those who are in share market term trading as a risky game but if one it plays smartly he can earn enough money.

profit

Many investors enter in stock market thinking they will make a lot of money and that too in a very short time. But as everyone knows there are no free lunches. Trading is a game which requires forming the strategy with a disciplined approach.

Many traders make money and many lose money too and you should know if trading activities suit you or not depending on your financial position.

Even when one gets trading tips, its execution is important. It is said trading is simple, but not easy. One has to be disciplined in his approach.

Discipline in trading cannot be overstressed. In most cases when people are making money, it is their greed for more that makes them wait instead of booking profits. When the market takes downturn it is fear that makes them sell fast. These circumstances can be avoided if you know when to book profit/loss. We have discussed a few trading habits and skills that will help you stay on the right track.

Discipline – While entering the trade one should be clear on the stop-loss value of the share, and follow it in a disciplined manner. Depending on the volatility of the share one can keep the stop loss at 5 or 10 percent.

Skills – While trading one should know what to do and what not to do. Trading is basically a skill to know when to get in (enter) and when to get out (exit) trades.

Planning – Proper planning is a must. One should concentrate only on few stocks and plan at what value one has to buy, decide a stop loss, and at what value one should sell.

Capital – For a meaningful trade one should have sufficient capital to invest in stocks. The capital that one invests should be owned and not the borrowed one. Though traders can trade with less capital but volumes and return also count. Minimum capital should be INR 3 to 5 lakhs.

Price range – One should prefer shares the difference on which in an intraday high – low should be INR 10. It is not useful buying shares which has high volumes and not much price movements.

Timings – With reference to Indian context the best time to trade is 9:30 to 11:30. It is observed that during this time, the market is most volatile.

Supply and demand – The value of stock changes with the supply and demand of the individual stocks. If the number of shares up for sale is more than one should not buy the stock and vice versa. To know if the sell quantity is more or buy quantity is more one can identify by performing a technical analysis of each individual share company.

News – Never trade on news that is out in the market. A stock price adjusts to the news within few minutes and later on, they return to their normal.

Charts – There are technical charts and fundamental analysis which should be studied minutely. It gives out many clues regarding the direction of the market.

If you wish to trade and want tips regarding how most probably the market will behave, you can contact us.