The Share market can make you super-rich, at the same time it can also make you a pauper, corresponding to the uptrend & downtrend of share prices. A person can make immense fortune in a bullish market whereas in a bearish market he may suffer huge loss of money.
Thus, one needs to be very careful while investing in the share market. If you’re new into stock trading in India, here are some tips to get you started in the right direction.
Stock Trading Tips For Beginners in India
Let’s start with the first and most important one.
1. Gather information about the company before investing
Many investors neglect in gathering necessary information about a company, before investing in the company. They may be in a hurry to buy the shares, but the information about the company’s basic offerings and net profit must not be overlooked before investing. It is always best to invest in a company with good reputation & having consistent profit and good market value.
2. Cheap shares may not be always profitable
Some people have tendency to buy cheap shares in bulk. Many companies sell their shares at a cheaper rate than others to make quick money. However, if the company face financial crisis, they may not be able to give returns on shares to its investors.
3. It is better to invest for a long period than short
The price of shares rise and fall unpredictably in the share market. Therefore, the investors need to be careful before buying or selling shares. Since share prices fluctuate very much, only wise people can make profit from short term deals of shares. But, it is best for investors to go for long term investments in shares. Longer term shares are also tax-saving, since tax is imposed only on short term profits; investments for more than a year are usually not taxable.
4. Keep in mind investments and their present status
Sometimes people, who invest their money in too many shares, may forget about some of their investments. Therefore, people need to be alert to all the happenings in the stock market.
5. Buy shares of good companies from all sectors
It is advisable to buy shares from important companies of all major sectors, so that in case of any recession in one sector, investor can still profit from another one, without incurring any major loss.
6. Every investor should ideally set a stop-loss mark for shares
The investors can set a certain benchmark for their shares, which will be somewhat less than the cost price of those shares. Their brokers must be tipped off to sell their shares when the prices fall below these set-up points. Thus, they can minimize their loss in share trading.
7. It is wisest to sell one’s shares when the prices start to fall
Sometimes, the prices of shares may fall suddenly due to an unexpected tragedy, but it is more likely to be a temporary phase. But when share prices keep on decreasing, for example in an economic recession, it is wise to sell off their shares before prices go down too much.
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8. It is best to follow share market trends of rise and fall
Share market prices fluctuate in response to major news, whether good or bad; though actually share prices should depend only on the profit and capital of the company selling them. Thus, the price is more in case of a happy incident, where else the price drops when a mishap occurs. Hence, the investor needs to watch all the news in the media carefully before investing in shares.
9. One should avoid share tips sent through SMS
Many people often receive plenty of SMS or mails with advice of which shares to buy at that time. But, often these share tips are nothing more than advertisements of certain shares. So it is unadvisable to follow any of these messages at all. Even advice of experts published in newspapers or TV, should not be followed blindly without more research.
10. Investors must not trust the share brokers completely
Many investors tend to do their trading through brokers, since they may not have sufficient time or knowledge of the market. But, often the brokers take investors’ money as brokerage rather than investing, or do own share trading with that money. So it is less expensive to invest on your own, without taking help of a broker.
An investor can make huge profit from investing in share market, only if he follows these precautions and guidelines of share trading, which may help him to become an expert in this business eventually.
All the best!