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.

How can you earn money from Indian share market?

Many people start stock trading to make good money. However equity trading is not easy for all, despite it, many investors have made a good profit in stock trading. There are some basic principles of trading like one must have discipline, patience, market understanding and research ability.

Indian share market

Indian stock market is quite volatile. This creates confusion among investors regarding their decision to hold or sell stocks. Therefore, there is no tested or proved the formula that can help to achieve desirable success in the share market. However, there are some trading rules that can help to increase chances of success during trading.

1. Follow disciplined approach 

If you study the history of the Indian stock market then will find one thing that whenever the stock market goes up suddenly it creates some panic moments for investors. A big number of investors had lost their money when the Indian stock market had a bullish trend. It happened due to the volatile nature of the stock market. On the other hand, some investors who had followed a disciplined approach earned good money. Therefore if you have a long-term trading plan then should use a systematic disciplined approach.

2. Control your emotions

There are numerous investors who have lost their money because they did not control emotions during share trading. Investors invest in share market to make good profit and greed of this they invest in wrong shares. Greed and fear are two factors associated with emotions and these must be controlled during stock trading.

3. Trade with surplus funds

Some investors take the loan and invest in the stock market in the belief that it will return good money that is wrong. The stock market is full pack with up and down. You should not test your skills or luck with debt money. If you are a newcomer in the stock market then it is advised that you should use your surplus money for trading. If you start making the profit then use the same amount to buy other shares.

4. Set realistic goals

Most of the investors set earning goals for invested money. You also can set financial or profit goals during trading but it must be realistic. There is no guarantee that you will get the same return each time. Therefore you must set achievable and realistic financial goals.

5. Avoid herd mentality

Many traders follow herd mentality means they buy or sell a specific share if most of the traders are buying or selling. In such way, they try to go behind majority without their own research. You should avoid such mentality because it will not work in long run. You should do your own research and follow self-trading strategies.

The stock market is one of the best ways to get the good return of invested money but here also you will have to follow some basic rules. If you follow these then can stay in the stock market for a long time because profit and loss are two faces of trading in the Indian share market.

Many investors have been made the good profit, you also can but will have to keep patience and avoid greed during trading.

How to choose a better stock option for investment?

Share market is considered one of the best options to increase investment in a short period of time. However, it is good if you are ready to take the risk with your invested money because here profit and loss both exist. Either you are a beginner stock trader or having experience of few years, you should focus on choosing the best or a better option to get back more value of your investment.

stock option for investment

Each company listed in the stock market promises to return huge amount than invested but investors have limited money to invest. He cannot buy stocks of all companies, therefore, research-based selection of stocks and an adequate comparison is compulsory before buying stock.

Here we have discussed a few rules that will help you to choose the best stock option.

First Rule: You should invest in easily understandable business model companies. It will help you to predict the company’s future because its business model is simple and a common man easily can understand it. You also can select those companies which have a sustainable business; generally, such companies are considered trusted investment option in the share market.

Second Rule: In stock trading, a famous saying is “past performance is not a guarantee of future performance”. However, it is not true when you choose stocks to buy. As a company’s past track record helps to predict its future growth. Therefore before buying stock of any company you should do adequate research about past business growth of the company.

Third Rule: Some companies give a high dividend to their shareholders while some give very poor. You should go to companies which distribute rich dividends. You should give preference to rich dividends companies in your investment portfolio.

Fourth Rule: Diversify your investment portfolio. It means you should pick stocks from different industries and different fields. If any news, government rule or any other outer things affect the stock of any specific industry in such cases other stocks of your portfolio can manage the loss of those shares.

Fifth Rule: Always said choose “Best in Breed”, it applies in stock choosing also. There are numerous companies in different segment and industry but some companies are considered as “best in breed”. You should choose such companies. The stock of such companies gives high return and shareholders trust on their business model.

Sixth Rule: The most common share trading strategy is “Buying when the price is low and sell when the price is high”. However, you should go beyond it and buy stocks of new growing companies. Most of the experts suggest that buying shares of new and growing companies at an early stage is a guarantee of high return on long-term. You can go for it if looking for better stock options for long-term investment.

In the stock market, a number of techniques and strategies are used to choose the best and profitable stock option to gain a high return on invested money. One strategy may work for one but there is no guarantee that the same strategy will work for you as well.

Therefore you must be more conscious to follow anyone.

Share market investment tips for early-stage investors

These days each and every one wants to become rich as quick as possible. To search such ways, some people buy lottery tickets while some move towards share market investment. There are a big number of people who thing investment in stock market is the easiest and quick way to become rich. However, it is not true for all if you don’t follow some basic rules of the investment in the share market. Some early-stage investors also rely upon luck when they don’t have basic investing knowledge.

investment tips

Here are some common investment tips that early stage investors should follow:

1. Go for long-term aims

First of all, you should ask yourself what is the aim of investment in the share market. Do you need investing money back in the next 3 months, 6 months or a year? Are you investing for future expenses like buying a home, car or bear college expenses etc.?

Before investing in the share market, you must have a clear purpose of the investment. If you are expecting a huge profit in a short period of time then you must rethink about investment in the share market. Due to the volatility of the share market, it may not return desirable return in short time. You will have to go for long-term aims.

2. Diversify investment in share market

The most popular method to manage investment risk is diversifying investment. The most popular thought about investment is “Don’t put all eggs in one basket”. It is really true in the share market. You should buy stocks of different companies which deal in different industries. If any bad news or event hit the companies of the specific industry then investment in other industries may help to recover from the loss. All experienced investors make their investment portfolio with the share of different companies belong to varies industries.

3. Controls on emotions

To control emotions during stock trading is the key to make the profit in share trading. Most of the early stage traders and beginners fail to control their emotions especially when they suffer from the loss. Sometimes, fluctuation in the share of a particular company or companies of the specific industry may be due to rumors, market news, government’s new policy or rules and investors’ hopes along with emotions. So, you should not flow in emotions like others and make a decision on the basis of the company’s prospects, management, and assets.

4. Understanding of your risk tolerance ability

Risk tolerance varies person to person and is a psychological trait. It is based on different parameters like age, education, lifestyle, income etc. Risk is an important element of the stock trading and both early-stage investors and experienced have to face it. You must have risk tolerance ability if you are planning to invest in share market for long time. Stock trading is not free from risk, so you must be familiar with your own risk tolerance ability. However with understating of your risk tolerance capacity, you will avoid to invest in those companies which can make you anxious.

If you follow the above-mentioned tips then you can become a successful early-stage investor.

Why do most people suffer a loss in intraday trading?

One has to work hard to earn money and there is no free lunch. Same is true with intraday trading as well.

Many traders enter in intraday trading enthusiastically thinking they will earn a lot of money in a very short time period and will become rich overnight.

Indian Stock Market

The sad part is that nearly 90 percent of them exit within a few months of trading and losing most or all the money they have invested when they started trading.

Reasons for such a huge percentage of failures

Most of the people do not understand the rules of the game. In anticipation and haste of reaping huge profit overnight, they keep on committing the same mistake repeatedly. They do not understand that they have to spend adequate time to learn the ropes and succeed in the long term.

Some traders repeat same mistakes again and again

In life everyone makes mistakes but a newbie trader makes blunders. They believe in tips provided to them from unknowledgeable investment consultants. The tips that are provided are based only on market speculations only. There is no reasoning, calculation, analysis, and rationale of the tips that they provide and many of them do not have the license to provide any consultancy services.

So at the end of the day when the stock has to be squared up, the traders have no option except to sell it at a loss. So when things like this happen repeatedly traders lose confidence and start playing safe. This, in turn, reduces the profit margin and thereby is at loss of the whole purpose of intraday trading. Only those persons should go for intraday who have deep pockets. For shallow pockets sustainability is low.

Prepare and analysis for intraday trading

One of the important reasons why people fail in intraday trading is that they jump into this field without any preparation. They do not study market behaviour and pattern. Many even do not know the high and low of stock. They do not go through or read the company parameters. Just based on some relatives or friends tip they put in their hard earned money at stake. If the basics and fundamentals are not clear or you do not have a profound knowledge of the subject matter naturally the trades will not earn you any profit.

Taking care of timing

One has to be very cautious about the timing during intraday trading. Both the entry and exit points should not be missed. Before buying any stock one should decide at what price one has to enter and at what price one has to exist for both the high and low of it. As soon as the stock price rise reaches the predetermined price or the prices that you have decided upon one should book profit and exit. One should also use stop loss and adhere to it. In case the price falls to your predetermined stop loss it is better to square off your position and move forward.

Those who do not follow these plans religiously, land into trouble. One should have self-control, make a plan and stick to it. Trading with a disciplined approach will help you reap good profit in a long run.