Several people have made it big in stock trading, but trading in equities is not at all easy. If you are finding the ways about How to Make Money in Share Market. Then you come to the right place.
There is no such formula that has been discovered to achieve success with stock markets. It requires discipline and patience and also research with a thorough understanding of the markets.
Some rules that can be followed to increase the chances of profits which we are going to discuss in this article.
How to Make Money in Share Market:
- Know The Kind Of A Trader You Are:
The two kinds of traders in stock markets; one kind includes those who follow fundamental investing and the second kind is the speculators. The major difference between them as they see the price of the stock.
The investors who follow fundamental investing give less importance to the price of the stock as compared to the speculators. They are more concerned about the fundamental strengths of any company.
Thus, to make good money in the stock market, one should practice the fundamental method of investing.
2. Learn To Do Price Valuation:
When the market becomes overvalued, investors sell stocks and book profits. Then, this is the time when the stock market is bullish that means stocks trade at overvalued price levels.
Try to take advantage of the price momentum by estimating the intrinsic value of stocks.
3. Practice Long Term Investing:
Many investors earn money in the share market by holding on to their stocks for the long term. Try to buy such stocks which you can hold on to forever for example Microsoft, Apple, Google, etc.
After that, start tracking their performance, whenever they reach the goal, sell it and book profits.
4. Do A Detailed Stock Analysis:
It is important to know basic stock analysis techniques. The stocks need to be evaluated based on fundamental strengths and their price valuations.
Before committing to any stock, investors must ensure about the stock is overvalued or undervalued. These are key steps of investing in the stock market:
Step #1 – Check Price Trend:
Open the price chart and see how the stock price has changed in the last 6 months and note from where to where the price has moved.
Then, check the stock’s simple moving averages (SMA) for the last 3 months, 6 months, 9 months, and 12 months.
If SMA is showing a rising trend, then the stock may be overvalued. Try to avoid such stocks and target those stocks which are showing a falling price trend.
Step #2 – Check business fundamentals:
After shortlisting a stock whose price is falling, the next step is to identify its business fundamentals. Check the companies liquidity position, profitability, debt levels, growth prospects, etc.
Step #3 – Check Price Valuation:
It is essential to check if the price is right to buy or not. It can be check by valuation using financial ratios.
5. Try And Avoid The Herd Mentality:
The decision to buy or sell a stock is mostly influenced by the trader’s acquaintances. If everyone is investing in any particular stock, a potential trader tends to invest in the same stock.
Try to avoid such practices as such strategies do not work well in the long run. The World’s greatest investor Warren Buffet said that one needs to be fearful when others are greedy and needs to be greedy when others are fearful.
6. Never Try To Time The Stock Market:
One can lose one’s hard-earned money in no time by trying to time the market. Many expert investors advise not to time the stock market as no one has ever done this with success.
It is not possible to accurately catch the top and the bottom prices of any stock. Thus, never follow such a strategy if you are planning for investing in delivery.
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7. Have A Disciplined Approach For Investment:
According to the Study of stock markets, it is noticed that even the best bull runs in the stock market have given many panic moments to investors.
Due to high volatility, some investors have lost money even when the markets had a bullish trend. Also, these investors who put in their funds with a disciplined approach have generated outstanding returns.
Thus, if you have a long-term gain in mind, do follow a systematic approach for investing.
8. Never Let Your Emotions Influence The Judgment:
Many investors lose their money in stock markets because of their no control over their emotions. While trading in a bull market, traders have a lure of making more.
For such, they end up investing in the wrong shares. Fear and greed are two factors that have to be controlled while trading in shares.
9. Always Have Realistic Goals:
If traders have unrealistic financial goals, they might get into some real trouble. Traders can hope for the best from the investment but never expect the same returns from the stock market.
Traders always have realistic and achievable goals.
10. Always Invest Your Surplus Funds:
Many people get into debt due to the investments they made in shares. If you are a beginner in trade, always use your surplus funds. When you start gaining profits and then use the same amount to re-invest rather than opting for loans or debts.
- How to Make Money in Share Market
Wrapping It Up:
The above mentioned are some simple tips about How to Make Money in Share Market.
These steps might help beginners in stock trading. The first step to trading is to open a Demat account for trading in the stock market.