Market capitalization or bear market is not a language that everyone speaks, but there’s money to be made out of the stocks. And you do not have to be a genius.
ALSO READ: How to Invest in Stocks on a Shoestring Budget
Even though the stock market has been in existence since the 16th century, many people are often skeptical about plunging into it. But do you have to be a seasoned investor to be successful?
The short answer is no.
If you are just starting, pay attention. This article will give you tips on how to make money in the stock market.
Let Go of Your Emotions
It is true; business and emotions don’t go well together.
In the stock market, the most common emotions that can cloud judgment are fear and greed. In a favorable market where share prices are rising (commonly known as a bull market), a person may be drawn by greed and end up buying the wrong shares.
Likewise, when share prices are falling, one may panic and in a frenzy, sell off great stocks at a loss.
The idea is to always act from the point of knowledge. Of course, you do not require a degree in finance to be a successful trader, but trading courses can equip you with skills that can make all the difference.
The stock market has churned some of the wealthiest people in the world, but that’s not the whole story; it is not a get rich quick scheme. Even though there have been very successful investors such as Warren Buffet or George Soros, not everyone can tell a story of success.
One of the biggest mistakes you can make as an investor is to expect the same results as someone else, even if the market conditions are the same. Many things affect share earnings or prices, and there’s no formula for success.
Set realistic goals and celebrate small wins. Investment is a journey that requires patience.
Invest what you can afford to lose.
It is reported that 23,000 people committed suicide in 1930 following the stock market crash of 1929. While the stock market is not like playing blackjack, beginners are always advised not to pour in their life savings.
It is difficult to come across a seasoned investor who has never lost money in the stock market. In February 2018, Mark Zuckerberg lost $3.62 billion while Jeff Bezos lost an almost similar amount in the same period.
The truth is that many people lose every day. To avoid getting yourself in trouble, invest using your surplus funds. Once you make a profit, reinvest the monies and continue growing your portfolio in that manner.
Know What You Want
Investors have different goals in the stock market and therefore see things differently.
Followers of fundamental investing have long term goals and look at the strength of a company before investing in its shares. The idea is to benefit from dividends and grow their investment as the company grows.
On the other hand, speculators are always on the lookout for a quick kill. To this group, it is the price of a stock that is most important. The mantra here is to buy when prices are low and to sell when they go up.
Before dipping your feet in the water, understand what strategy you want to go with and stick to it. Indecisiveness is not something that will take you far in this trade.
Do Not Move with the Crowd
It is Shakespeare who coined the term “jumping with common spirits”. It is unlikely that he had the stock market in mind, but the herd mentality is something that many people succumb to when investing in stocks.
While it is important to observe what is happening in the market, do not base your decision to sell or to buy solely on the actions of others. Let your every move be determined by information or instinct.
It is Worth Every Cent
While you may not become a millionaire, you can earn a tidy profit for a long time from trading in stocks. Equip yourself with knowledge and Ignore the myths, and this may turn out to be your most lucrative venture yet.
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