18 Pointers on Stock Trading

Owning part of a successful business without having to take the pressure which comes along with day to day management of running one – is the dream job for most of us.

Stock trading makes this a reality for people like us.

By owning stocks in a given company, you can maintain your distance and watch your company grow from one level to another.

Stocks are excellent financial instruments that allow you to grow your income by doing nothing but collecting profits at the end of a financial year.

This gives you the opportunity to witness the growth of your assets while all you must to do is understand the ways in which the stock market works and patiently make pragmatic market decisions.

With patience and precision, stock market trading can provide you unhindered profit and growth. Investing in stocks is considered to be an integral part of an investment portfolio.

Thus, it is important for you to have a complete understanding of what stocks are and how to trade them before embarking on your journey to financial freedom.

Stocks are traded in stock markets; hence it is vital to understand the stock market as well.

Like all other fields of money making, stock market trading also requires an in-depth understanding of how to make investments, when to buy or to sell your stocks.

Reading market signals is considered to be of utmost importance and this would lead you to all the wealth you were hoping to acquire!

Stock market has gained quick popularity over the past few years and this is mostly due to the advance in technology which has made stock market trading open to a larger crowd.

The idea of success in trading has been a topic well debated over.

Is it a safe zone to play?

Is it secure to invest all your energy and capital into this?

Success in trading can be achieved through years of practice and there is no easy way to gain success in the stock market without facing fear or loss.

There might be several websites and books aiming to offer you the best assistance – but at the end of the day, it is your decision making skills which pull you through in the game of trading.

It is important to remember what is a farce and what is real in the market.

There might be several fake websites willing to offer you an easy way to make money in the stock market and it is important to remember that there is no easy to way to make money after all!

Therefore, it is important to remember that trading is no short cut to becoming rich but a good understanding of the stock market will definitely put you on the map of financial success.

This post outlines 18 important pointers that you as an aspiring stock trader could put into good use.

  • It is important to remember that in the stock market, stocks that seem too high in price and risky to the majority is eventually found to go higher, and to the contrary, stocks that seem to possess a lower risk rate and cheaper price usually go lower with time.
 
  • While on the lookout for favorable stocks, make sure you search for companies that have developed newer line of products and services or have gained exposure through a newly appointed management. This benefit incurred through improved industry conditions could add on to your advantage if you invest in such stocks, as they emerge out of well analyzed price consolidation patterns and have a higher probability in making new price highs on increased volume.
 
  • It would be advisable to invest in companies which are buying their own stocks in the open market – if they believe in investing in themselves; it is always a good sign for you to dive in as well!
 
  •  Most investors hope to have a Low Corporate Debt-to-Equity Ratio while looking to invest.
 
  • In stock trading, skilled, careful market observation is very important. It is important to note the various stages of a stock market cycle.

trade according to stock market cycle

  • The most important rule for all efficient investors and homeowners is to never borrow more than you can pay back. Large pile of debts is a big no-no for every one – irrespective of our financial and social background. It can cause a great deal of harm to vast companies and even governments.
  •  As you choose to invest in stock trading, make sure you evaluate Supply and Demand ratios at play.
 
  • As you enter the market, you will find how the Small-cap stocks are a lot more volatile than the rest. This is because the market shifts emphasis from small to large caps over a span of time. In such cases of stock trading, always prefer companies who would buy back their stocks in an open market and show stock ownership.
 
  •  It would be advisable to buy the best two or three stocks in a group and not to invest in newer stock leaders in the market.
 
  •  It has to be remembered that the winners in the market also make a fair share of mistakes – so, before you make an investment in the market, always remember that a brand name counts but it doesn’t mark their invincibility in the stock market.
 
  • In the stock market, always keep an eye out for Abnormal Strength on a Weak Market Day.
 
  •  Investing in laggard stocks is not a very bright idea. Most traders are tempted to invest in laggard stocks due to their awfully cheap prices but it is always advisable to confine your purchases to market leaders. It is always a risk to invest in a company which is lagging behind in terms of its prices and success rate – so choose your stocks carefully.
 
  • Most investors have found it rewarding to invest in companies that show increasing sponsorship and have contributed to new stock positions bought within the last given financial quarter.
 
  •  Tracking general market indexes are important for every day trading activities.
 
  • Always remember that a small percentage of fall in the stock market requires a vast percentage of raise in the stock market to even out the damage.
 
  • Sudden market downturns are every trader’s worst fears. Insure yourself against such sudden unforeseen negative strides in the market.
 
  • Stop Loss Orders are a must learn for all market enthusiasts and traders. While dealing with stock trading, make sure you familiarize yourself with the use of stop loss orders.
 
  • It has been noted over the course of time that an “Unassailable Institutional Growth Stock” always tops the stock market.

CONCLUSION

It is important to note that you must buy stocks with proven records of significant sales and earnings growth in each of the last three years plus strong recent quarterly improvements and a high return on equity.

Always give importance to learning more about charts – on how to spot sound chart patterns and combine your new charting skill with the stocks with great earnings, sales, and return on equity.

It is extremely important to remember that the crucial hold over success can be achieved only through years of experience in trading.

year of experience is required to achieve success in trading

Unfortunately, there is no easy way around this one rule.

The right mentor and a supportive broker might be two means through which you can achieve success faster.

This success, as tasted by many traders around the world, can be achieved through persistence and years of resilience.

One cannot be fooled by the glossy advertisements available on the internet which might promise you a million dollars through their trading approach – always remember this is a farce.

Just like a sharp downfall which descends post an unprecedented uptrend, easily gained money also slips out of our hands just as easily.

So, remember that there is no short cut to becoming rich but it is only through constant struggle and the thirst to learn more and more everyday which can pave way to your road of eventual success.

For a better clarity on different methods that could be incorporated for successful trading in the stock market, please refer to our report titled “Steps Leading to Successful Stock Trading” on www.stockmarketsignals.in