How to Invest in the Stock Market – Beginner’s Guide
Tips for Investing in the Stock Market
Do you know how to invest in the stock market? Well, most people know about stock market investing but few know how to actually make money from this market on a consistent basis. The biggest mistake new investors make, is that they invest their hard earned dollars without any prior knowledge or without seeking any from of real expert advice.
Many retail investors get a limited amount of knowledge from various sources and start investing without further investigation.
However, this is not the right way of making wise investments, therefore, it is always suggested to consult experts (or research expert opinion) prior to making your investment decisions. It is not easy to earn profits in the market, but it is also a fact that the stock market can make you filthy rich as well. So, before investing in the market, it is necessary for the investor to have the complete knowledge of the trade they are about to enter. You have to also understand the basics of the way the stock market works.
The very first step in making an investment is to select stocks that are generally considered to be safer. People often believe that investing in the IPO is the best way to enter the the market. However, this is not often the case. Rather than investing in the public offer, it is suggested to invest in the large companies ruling the share market. This is because companies that are newly listed are considered to be more risky than the established blue chip companies.
After making your initial investments, you can then look to diversify your portfolio according to your knowledge. Try to obtain research reports of various companies from your brokers. Make an effort to learn the company balance sheet and understand the industries the company is operating in. It is suggested not to depend on the market tips provided by your friends, or from one-off “sure thing” recommendations you see floating over the internet!
Delivery based transactions are sometimes half of the total volumes in the market. This indicates that the rise in price of these stocks is totally speculative and not backed with any fundamentals. This scene is also true for large capital and well known stocks. Therefore, it is suggested that stocks should not be purchased for short term trading.
Never over-leverage yourself. Due to the heavy flow of investors in the market, exchanges and depositories have tightened the rules regarding this. However, this doesn’t mean that all fraudulent brokers have been eliminated. Be vigilant at the time of selecting your broker.
Choosing A Stock Broker
If you are going to invest by yourself, then look for the cheapest broker. However, if you are going to completely rely on the broker, then you need to look for the ones who have best research capability and proven results.
If you have an online broker, then you should check your depository status regularly. Shares should be moved to your account the second day of your purchase and the cash should also be moved in the same way after you sell. It is essential to check your DP account on a regular basis. This is because sometimes traders shift your shares to a general pool and make transactions with them. In order to avoid this, you should keep track of your account.
The stock market is full of risks, before making an investment, as an investor, you should gain expert advice and investigate your options in order to make the right investment. Facing the risk of an intelligently calculated transaction going wrong is one thing, but losing your money just because of greediness and laxity is another.
You also always need to decide how much you are prepared to lose prior to making any investment… chances are you will be fine if you have made an informed purchase, although things do go wrong as well!
Good luck with your investments. Be sure you learn all you can prior to investing your hard earned money. You can win big with the right knowledge, you can also fall hard by making un-informed decisions.