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4 Tips To Winning In The Stock Market
As an investor, knowing the right strategies that can be applied to earning bountiful returns within the stock market is important. Most beginners do not know how and why their equities fluctuate up and down in the market.
Whether long or short-term stock investment, there are specific principles that guide and determine one's fortune in the stock market. If these principles are properly applied, an individual could become a shareholder guru.
As a young investor trading in a space with whales and other big fishes in the industry, one way to thrive and survive is to get quality information and be a member of an active community of young investors like you are. Wallstreetbets is one of the best platforms.
On this page, we have listed four essential tips for having an edge in the stock market. However, note that these principles do not mean you will start experiencing success only while trading. While you may experience a downturn in some cases, being patient and applying some specific strategies can provide you with more than a 50 percent chance of yielding profits in the long run.
The low-risk Investment
If you want your funds to be safer while trading, you can look into getting an index fund (Mutual fund or Exchange Traded Fund). The index fund is a diversified investment that provides access to over dozens or even hundreds of stocks through just one share made. The S & P 500 is an example of a diversified investment most beginners should make.
Does this mean individual stocks can't be invested?
The answer is no. However, if you want to invest in individual stocks, you must be ready to analyze the targeted company by evaluating its competitive advantages, studying its finances, and its Price earning ratio (P/E ratio) or Earnings per Share (EPS). Note that doing this on your own can take time and be more challenging, hence the need to go for the index fund, which is low-risk management.
Investing With Virtual Money
Another way to avoid losing a lot of money on the stock exchange market is by investing in virtual dollars instead of using real money, which could, in some cases, be quite risky. The evolution of technology has made it easier for investments to be made. Instead of being physically available at a stock exchange venue, one can open up an online trading account and invest in equities using cryptocurrency.
Cryptocurrency such as; Bitcoin, Ethereum, and other coins or tokens could prepare or train a trader for real investments. One could practice investments and learn to cope with the fluctuating market using the cryptocurrency method. Recently, cryptocurrency has become the new financial modus of exchange that many investors use in their dealings.
The Long-Term Investment
An investor should learn to stay committed to his shares in a particular company or set of companies. Many short-term investors tend to lose more capital in the market by frequently buying and selling the same stocks. You can leave your investments for a long period of time to accumulate or grow. Long-term Investment not only tends to stabilize cash but also reduce the tax that would be paid when it's time to withdraw their profits.
One way to stay committed to a long-term investment is by separating oneself from the daily stock exchange news cycle, which might sometimes be quite discouraging. However, if you want to consider short-term investments, you can open a savings account, short-term CD or money market account.
Construct A Stock Screen
Another way to guide your Investment in the stock market is by constructing a stock screen. The stock screen is usually some sort of graph that determines the time horizon, risk tolerance and tax implications when in the process of making an investment. You can also choose criteria parameters using the stock screen, such as early-stage / mature industries, Smaller/larger market capitalization, Ratios and Valuation.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes