With rising inflation and soaring prices, it becomes difficult for an individual to live existing lifestyle with each passing year. It is important to look for alternative sources of income in order to secure future financially.
The stock market is one of the sources that can help to beat inflation and make you financially free. But, investment in stock market is risky. If you don’t know about the stock market, you may burn your fingers. If you have a good knowledge of the stock market, this option can be highly rewardable.
Whether you are a beginner or a professional trader in the stock market, you should follow some rules to survive in the market.
Do’s and Dont’s:
- Only invest what is surplus: In the stock market, there is no assurance of returns. Many times, a bad may even last for years. Therefore, only invest such money, which is of no immediate use and will not impact lifestyle.
- Research before investing: One of the key reasons why people are not making money from the stock market is that they do not put initial efforts before investing in shares. Learn technical and fundamental analysis first before making any investment in the market.
- Start small: I don’t know why people put more money when they just enter the market, instead start with very low capital, build a base and then slowly increase capital.
- Have an investment goal: Working towards a goal keep you in focus and there will be fewer chances of making errors. A stock market is a place where people lose their temperament very easily and make mistakes which in turn emptied their accounts in few days. Always see a broader picture and work towards your goal.
- Have patience: From the moment people buy stocks, they start looking for returns and when the stocks start moving in the opposite direction, they start panicking. You should have faith in your analysis and look for long term perspective.
- Always have a stop loss in mind: The Stock market is a place where you can have small profit, small loss, big profit, and big loss. Out of these, we have control over our loss. We can make our loss either big or small. Always work with stop loss, so that your small loss does not turn into a big loss.
- Don’t believe any tip provider/ recommendations: In the stock market, you are the only one responsible for your loss or profit. Don’t believe in any tip providers or brokerage recommendations. It is your hard-earned money, do not invest based on someone’s analysis. Do your analysis, based on that, make decisions to invest in the stock or not.
- Don’t over trade: In the stock market, two emotions basically trigger fear and greed. The reason for over trading is the triggering of these two emotions. Every time, you buy or sell a stock, you are paying brokerage and taxes. Sometimes, these brokerage and taxes are higher than the actual profit you get. Always make confident decisions and make transactions when necessary.
- Don’t make an emotional decision: It is better not to trade rather than making emotional decisions in the stock market. If you are unable to find a trade, don’t trade. Sometimes, it is better to sit idle
- Buy fear and sell greed: I have seen people who are investing in a stock when it is trading at high and selling a stock when it is trading at a low price. Always buy a stock when it is low and sell a stock when it is high.
In conclusion, I will say, if you learn and follow the rules properly, no one can stop you to make money from the market.