The mantra for best online trading for beginners is to keep it very simple. There are actually no fixed rules for choosing stocks and stockbrokers. You could be quite flexible and get any ideas that could help you in creating wealth including the most unconventional ideas but the thumb rule is to keep it simple. The guidelines of SEBI should be the only thing to follow while choosing stocks.
Below are a few helpful tips that might help you with capital appreciation and which are also considered to be best practices.
1. No aim- no investment
When you don’t have a goal or an investment strategy, there is no point in investing. There are different types of methods for making your investment. Thus, if you do not have a specific destination, then you will be simply wasting your time.
2. Invest only the extra money that you have in the share market
Try and keep all your finances in the right order before putting in your money in the shares market. In case you have a lot of bills and EMIs to pay that you are not able to, then first take care of all those things. Once all these things are taken care of you may go deep into investing money. Thus, you should always invest that money in the stocks which you have spare after clearing all the debts.
3. Extensive research about the company before you purchase stocks
Try to discuss everything with the CPAs, CEOs about the money you plan to invest. Investing in the share market relates to obtaining the answers for the right questions and choosing which stocks to buy and sell and when to buy and sell the stocks. Before asking all your questions to CFOs, CEOs, CPAs you’ll have to first educate yourself, especially about the financial topics. So it is important to read in-depth about the financial condition of the organization.
4. Start with passive investment in the stock market
Investing your money passively by simply sticking to the indexes, funds, etc. is an absolutely acceptable practice. The problem occurs when the investors move from passive investment to an active portfolio. You will find a lot of information available for beginners most of which is right. But accepting that information of the company with uncritical eye and ignoring to check it by you leads to problems. Critically analyzing that information is very important before investing the money.
5. Don’t be overconfident and micro trading
Overconfidence in beginners might lead to over-trading. Taking risks unnecessarily and eventual losses while the bull tears the bear is pointless. You also need to bear in mind the commissions that you have to pay with every transaction. This expense might eat up your profits and increase your losses.
6. Be patience
Patience is very important. As the market falls and when a stock dips, there’re weak investors who often panic and simply sell off their stocks. If there is actually an issue with the stock, you may utilize your time for finding a way of using it in the gain and loss transactions which would help you in saving taxes.
7. Analysis of the share market before investment
It’s often said that the pain of losses is far more than the emotional strength of pleasure of the gains. Resultantly, a lot of people pull off the market on a premature stage. Thus, before buying any stocks just ensure that the job was done correctly before buying the script.
8. Buy and hold mentality
Try to avoid churning. Warren Buffet suggests the buying and holding mentality.
9. Diversification of the portfolio is of utmost importance
You should not put everything that you have in the futures. Also, you should not hold everything in the treasury bills. You will find an apt level of risks involved for the investors of different creed and age.
10. Create an investment plan for yourself
There is no such thing as perfect investor or perfect stock trading brokers for beginners in the stock market today. All the expert investors lost a good amount of money time and again. It does not signify that they were not good investors. It simply means that you should not mimic any investment strategy which you don’t understand fully. Try and discover what style suits your needs, strengths, and weaknesses.
So, you need to be very sensible while doing online trading. Invest your money according to the most perfect rationale even when your judgment might go wrong, you would at least not repeat it again. Even when you lose your money, at least no one else would be responsible for it.
Apart from all the above-mentioned aspects, there are also certain practices which you should follow for trading:
- Loss is a part of investment– try to restrict your losses, accept them and simply move on to the next trade. Also, analyze your mistake so that you don’t repeat them in the future.
- You always need to keep in mind that the share market is much stronger than you are. You should not try and tame the share market according to your needs.
- Try and preserve your capital before you get an opportunity of appreciating it.
- Always sell losses and hold profits. Don’t speculate.
- Prepare an effective trading plan and then execute it accordingly. You need to be ready to gap up and gap down.
- Use stop-loss options.
- Never be afraid of buying high or selling low when you feel confident.
- Try and improve your psychology, your patience level, discipline as well as determinations as a key for being a successful trader.
- Follow the trends and don’t go against them.
- Self-control is much more valuable than predicting the trends in the market.
- Try to avoid the mistakes you have made previously.
Keeping these things in mind would help you to ensure that you are on the right track.