SHARE MARKET- KNOW THE RISK IN SHARE TRADING.

Hi Friends,   Everyone wants to make some quick money and to do that, one of the paths they choose is stock market.  Many people come to the stock market hoping that they can make money in quick time, but only few will succeed in that.  The success to failure ratio  is very low in the stock market.  So , you should make sure that you don’t end up  in the list of failed chunk.  In order to succeed in the stock market, you have to stick to your plans and should never deviate from it.  This is because it is very difficult to time the market even for experts.  So, you should concentrate more on individual stocks rather than concentrating on stock market indices.  Over trading results in more brokerages and less profits.  You need not be in hurry to make a transaction. Take your position only after deciding how much profit you want and if the assessment is misses where to put your stop loss. 

  You can protect yourself from over trading if you have a wrap account in which brokerage is charged at a flat rate rather than on every transaction. You should  not trade by looking at the 52-week high and 52-week low  values but trade according to the trends. It is a myth that you can buy a stock when it is at its lowest value and sell that stock when it is at its highest value.  Don’t trade heavily with less capital by the use of margin trading.  Before jumping into trading , assess your risk to reward ratio and trade according to that.  If you do that you can control your emotions.  Sometimes greed and fear will make us to act in different way even if we trade using stop loss techniques.  If you have already decided your entry and exit points, don’t try to change them.  Do slight changes only if it is necessary.  Give  preference to charts rather than emotions.  Give some time to learn the basics on how to read the  charts.  Give sometime to go through some information about the company before you start trading in that.  You have to do technical analysis of the stock before you start trading in it.  It is always better to trade a stock that has strong fundamentals.  This is because fundamentally strong stocks won’t fall drastically even if something goes wrong in the stock market.  If you gained some profit from a successful trade, don’t be of the opinion that you can lose some of the gained money in some other trade.  You have to trade according to a plan and not according to greed or fear.  

People hesitate to book losses even if they put stop loss triggers.  After losing some more money, they will think of retaining that stock for some more time.  Sometimes, the stock may not return to the value that was previously thought out.  This creates a long term attachment of that stock.  Selling time is more important than buying time.  It is very difficult to sell a stock that is already in profits.  Even after the target is achieved, people will try to retain that stock hoping that it will move further.  But if the trend reverses, you will lose already gained profits.  So, it is better to exit the stock if the target is achieved and wait for re-entry into the stock after  it corrects.  It is not a good idea to balance of old losses by giving more time to profitable stocks.  You have to analyze on your own even if some expert suggests for a particular stock.  Even some experts are biased towards some particular stocks.  So you should not fall in their trap.  You have to remember that people losing in the stock markets is far greater than people gaining from the stock markets.  Those, who are gaining from stock markets, gain in huge amounts.  This is because they control their emotions to a greater extent and they work according to their plans.

Thank you,                                                                   see you later.