February 20th, 2020 | Updated on November 12th, 2022
The stock market is a popular investment avenue where you can make money by buying and selling shares or securities. Bonds, derivatives, equity and mutual funds are traded at the share market.
A company that requires funds and wants to get itself listed on the stock exchange for the first time, brings in an Initial Public Offer (IPO). The investors can apply for the shares in an IPO. IPO is basically the primary market.
In India, there are two exchanges where the companies list themselves: National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
The investors can participate on these exchanges by indulging in regular trading or long term investing. It is also called the secondary market. Therefore, investors can buy and sell shares in the secondary market during market hours.
When the investors put money in the stocks, they must ensure that they are not making an investment out of wrong advice or research. To help you in this regard, we will list down some of the important stock market tips.
Stock Market Tips
1. Never Time The Market
Timing the share market is impossible. By trying to time the market, you only end up losing money. On most of the occasions, you would fail to correctly predict the direction of the market.
Like for example, if you want to purchase stock in a falling market and you are waiting for its further fall, you might go wrong and such fall might never come.
The stock market reversal can happen at any time. And in this process, you end up losing the opportunity to purchase the stocks earlier. The best approach is to invest for the long term and wait patiently.
2. Invest In Good Companies
You must always invest in companies that have strong fundamentals. Investing in penny stocks is not advisable.
Companies with strong fundamentals will be able to stay strong during bad times and manage market fluctuations in a better manner. These stocks also have higher trading volume and can give good returns in the long term. To discover high profit and low risk stock opportunities, use quantamental analysis.
3. Keep Researching
Investing in the stock market is an art and you must keep researching for good stocks for investment purposes. Most people avoid carrying out research and due diligence before investing.
This is because they want to avoid putting an effort or they do not know how to do it. It is always advisable to put money in the share market after understanding the future prospects of the company and the condition of its financial statement.
4. Say No To Emotions
The stock market is a roller coaster ride, you will go through various emotions in it. However, you must remember that there is no place for emotions in the share market. On some days, there will be over-optimism, on other days over-pessimism and so on.
You must learn to control these emotions. Thrill, depression, anxiety, relief and hope can lead to loss-making trades. Thus, you must try to overcome emotions in the market and have a practical approach towards it.
5. Avoid Being Greedy
Investors must always take their trades after determining entry and exit points. When the target of any investment or trade is achieved, you must timely book your profits.
This is because share markets are volatile and unpredictable. The profitable trades can turn into losses in no time. Therefore, make sure that you are never greedy with trades or investments.
6. Avoid What Others Do
People often commit the mistake of following what others are doing in the market. People do not understand what they are doing and just follow the herd mentality.
Herd mentality is investing in the same stock in which others are doing, This type of mentality should be avoided and you should invest according to your own research and rules.
7. Diversify Investments
A diversified portfolio is a most balanced and risk-free portfolio. You must look at the importance of diversification of portfolio and invest in shares across different sectors.
A diversified portfolio saves you from the loss in one sector with an uptrend in another sector. Also, this type of portfolio is capable of performing well during a bear market.
Conclusion
The above mentioned are a few stock market tips that can help you earn higher returns in the share market. With these tips, you will be able to manage market volatility and risks in a better manner.
If you are looking for assistance for investing or trading in the share market, you can get in touch with Kotak Securities. They are the number one broking firm in India and have years of experience in serving a large customer base.
They have the highest standards of service and provide a robust platform to trade or invest in the market. With the help of their in-house research team, you can make investments in stocks that have the potential to give higher returns in the long term.
