How to make money on the stock exchange expert opinion, How does investing in shares work
Sensex, Nifty end at fresh record highs; metal, auto shine Every investor wants to make money in stocksirrespective of the level of experience.
What are shares? Top tip: before you make any decision about buying or selling shares or funds, find out as much as you can about the company or fund. Do your own research or get financial advice. Shares also known as equities are like tiny fractions of a company.
Investing in the stock market is simple, but not easy. It requires passion, patience and discipline. Plus, one needs to have a sound understanding of the market and the forces at work and also some bit of research capability.
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Although there is no sure-shot formula or one-size-fits-all solution for success in the stock market, there are some broad guidelines, which if followed prudently can increase your chances of making a decent profit.
What is investment? Investment does not mean simply putting your money in the stock market.
Also, investing is more than buying or selling a product. Going beyond Sensex, Nifty and Dalal Street, we decode the concept for you in easy-to-understand, jargon-free language.
Invest in business An individual should always invest in a business instead of simply looking at the stock price. Avoid herd mentality The decision to buy or sell a stock should not depend on what your friends or relatives say.
10 steps to becoming an expert investor
An individual should not invest in a particular stock simply because people around him how to make money on the stock exchange expert opinion investing in it.
This may not yield good returns and one may end up with heavy losses in the long run. Consider the case of the Reliance Power IPO, which had received an overwhelming response from retail investors.
The retail portion was oversubscribed The company got The stock today trades at Rs 30 post bonus. This shows the kind of wealth erosion retail investors must have suffered.
Invest with a disciplined approach It is always prudent to invest systematically and with patience in the right shares or funds.
What Is the Stock Market and How Does It Work?
As the stock market is always volatile, an investor should be ready to absorb calculated risk and decide a necessary course of action like hedging against underlying stocks. Says Waqar Naqvi, CEO, Taurus Mutual Fund, having patience and a disciplined approach can help take the right decision, but one should think of the long-term picture. Have a broad portfolio By diversifying a portfolio across asset classes, you can help earn optimum returns with minimum risk.
The kind and level of diversification can vary from investor to investor, and it can help cope up with volatility, something that is part and parcel of stock market.
Have realistic expectations One should always have realistic assumptions. The equity market tends to deliver returns in spurts. Mean-reversion is the law of nature.
He joined Rare, an asset management firm, in June and took up trading seriously in May He is passionate about trading and does not focus too much on the long term. When he focuses on the latter, that's when disaster strikes The software for technical analysis is available on the internet for free, but with limited features. Professional software capable of highly detailed analysis comes at a price.
Stock market offers opportunity to enter and exit at regular intervals. Therefore, it is appropriate to keep some cash, instead of investing all of it.
The Kick of Quick Bucks
Corrections offer opportunity to enter a stock at a lower level, which can help make decent returns on trend reversal. Rigorous monitoring is a must Investing in the stock market requires regular tracking of news and company-related events, which may impact the stock price.
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For example, the recent news of increasing the axle load limit of commercial vehicles had a negative impact on the share price of Ashok Leyland. Similarly, good earnings can have a positive impact on stock price.
How to earn money from stocks? The ways mentioned above can motivate you to start investing in stocks. But the momentum of the market can be very confusing at times, without giving any scope for actionable strategy. Like in the current scenario, the equity benchmark Sensex is hovering around its lifetime high, but most stocks are in the negative trajectory on a year-to-date basis.