Tag: share trading

Top stock investing mistakes to avoid as a beginner

If you are a newbie in the world of investment, there are chances that you will make mistakes as you move ahead on the path of financial success. While some of the mistakes will prove to be a lesson, some can jeopardise your dream of stock market success.

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Irrespective of stocks you choose to invest in, there are a few tips and tricks without which you can make a profitable investment. We have enumerated a list of mistakes to avoid as a beginner in stock market.

  1. Investing without a plan:

Invest in Indusind bank, the stock is bound to rise. You went ahead with the investment without analysing indusind bank share price and trends and ended up in loss. Not having an investment plan is like travelling to an unknown land without a map. You will end up in loss. A good investment plan includes your own goals, finances, risk appetite, and benchmarks to measure your success. It will keep you focussed and enable you to make informed investment decisions.

  1. Investing in Bulk:

Investing all your hard earned money in one go is yet another mistake that leads to failure in the stock market. It increases the risk of loss to a great extent. Also, it paralyses your financial portfolio. Start investing small, and gradually increase the amount of investment as you understand the working of the markets. This will again help you make profitable investment decisions.

  1. Putting all eggs in one basket:

Another mistake that beginners make is putting 100% funds in a single type of asset. The best way to minimise stock market risk is to diversify money. If you are making one risky investment then it is important to balance it with a stable one. A good financial portfolio consists of equities, bonds, FDs, insurance etc.

  1. Having no investment plan

Venturing into investing without having a plan is like starting a voyage without a compass. You will end up as a loser. Before you start investing, you must have a personal investment plan or policy that include your goals and objectives, the risks that are relevant to your chosen investment style, the benchmarks for measuring your success, and your plans to diversify your investment. Having a plan will keep you focused and disciplined, and will help you adhere to a healthy long-term policy even when market conditions are unfavourable.

  1. Investing cash reserves

Yes, you have a burning zeal to bump into the investing world and start making huge fortunes later. That’s good, and that’s just the same motive every investor has. But most of the time, you will have this strong urge to pump all the money you have into your investment. Never give in to this urge, as it would make you regret bitterly in the long run.

Having an investment doesn’t mean you should have no liquid assets left. You should always set aside a good amount of cash for emergencies and opportunities that may never come again. Granted, saving your cash brings no returns, but investing everything is very risky as well.

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Nine Golden Rules To Win at Intraday Trading

Intraday trading or day trading refers to the trading system where traders square-off the trade on the same day. Squaring off the trade means to sell and buy or buy and sell shares before the market closes on the same day.Intraday traders or day traders are most prone to risk and market fluctuations. One can lose all investments or become a millionaire within a few hours.Many traders use high-end technical data from brokers as well as their own calculations to decide their intraday trading strategy, best stocks for intraday, and their spending limit. It requires patience and dedication to make decent profits. If intraday trading is something which attracts you, here are some rules to remember before taking the plunge.

all-about-intraday-trading

Choose particularly liquid shares:

Traders need to square off before the market closes. Always choose shares which are very liquid and traded in large volumes. It ensures that despite market fluctuations, you will have some buyers for your shares at the end of the day. If you trade in small-cap shares, you might stand to lose a lot of money.

Limited Scrips:

Scrips or shares are traded every minute, intra-day traders may have a lot of scrips in their portfolio, but it’s practical to trade in two or three as they have to be monitored continuously for the entire day during day trading.

Stop Loss:

Stop Loss refers to an order placed with a broker to sell or buy shares if it reaches a certain price. This is done to avoid losses.

Example – A trader has bought 20 Reliance shares worth INR 100 each and sets a stop loss of INR 80. If the price of the share falls to INR 80, the shares are sold. This ensures that if the price falls even further, the traders safe from loss.

Book profits:

A trader’s mentality changes whenever he/she makes a trade. It’s vital for a trader to book a profit whenever it’s made. If a trader has 20 Reliance shares worth INR 100 each and a stop loss of INR 70, however, the trader feels bullish that the share price could increase to INR 120, the stop price should be increased from INR 70 to INR 90 to reserve some profits.

Research:

Intraday trading involves traders doing obsessive research and analysing data provided by broking houses. Traders need to know all upcoming business events (IPOs, mergers, bonuses, bankruptcies). Any event which can change the market trend should be known to a day trader.

Respect The Market:

There’s a saying at casinos ‘The House Always Wins’. The same rule is applied in trading. A trader can feel that he/she can overcome market trends and each time a trader feels this, he/she bites the dust. Work hard, trade hard, and always respect the market.

Greed:

Every intraday trader wishes to earn a lot of money. If a trader’s having a great run, it’s good, but the trader shouldn’t fall in for greed and put in more money to trade without careful thought. There’s a good chance that whatever profits made earlier could be wiped out. Always book your profits, simple profits accumulated over time is better than blind and greedy risks.

Choosing a Broker:

A trader needs to have an excellent broker. Brokers should provide services which are quick and efficient when it comes to intraday trading. A great example would Angel Broking, they offer well-researched data, market updates during the night, efficient money management and their brokers come with a wealth of experience. Always go for such brokers.

Invest money you can afford to lose:

The last and most important point. Do not pledge valuables, go in debt, or borrow from others for intraday trading. A trader should always invest money which he/she can afford to lose and which belongs to him/her.

Intraday trading can seem lucrative with easy money, but it’s far from that. It takes a lot of years of experience and hard work to earn money. If you are up for it, tread with little steps keeping the above rules in mind.