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5 Smart Ways to Avoid Losing Money Trading Stocks

Posted by : Premraj | Posted on : Friday, March 24, 2017

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There are people who have made a fortune trading on the stock market. Warren Buffet and a few others are good examples. It does not mean that this investment option is better than any other.

It only refers to a general trend that occurs throughout. There are people who have struck it big in retail, others in technology, and so on. Every sector has a lucky or fortunate group of people who are able to optimize returns.

Most people however, have to look for the common predictors of success in the options they choose, and stick to them.

Long Term = Profit

This principle is a no-brainer. To see good returns on your investment, it’s wise to stay away from the get-rich-quick model. This is no different from gambling or betting.

According to the business development manager at National Air Warehouse, Ramon Khan, “one of the best ways to grow your income is to invest into companies that understand the values of long term approaches, such as creating a desirable brand and loyal following.

While these types of long term strategies can be hard to pull off and measure ROI from, in my opinion, the best companies to invest in are the companies that really understand those concepts and make it part of their identity, companies such as Chipotle and Amazon.”

In the same vein, if you want to grow real wealth from the stock market, you need to think long-term because most often, it is only the time factor that allows the company you have invested in to grow, and therefore bring in returns as a result.

Understand the Market

Before you make investment decisions, know how the market works. Look also for general opinions from seasoned players. If they predict that the market will soon begin a downward trend, you should wait for prices to reduce before you invest.

There are also different types of products in the market. Look at all of them, and let their unique features guide you into making a decision you are comfortable with.

Study Past Performance

While making a buying decision, factor in the stocks past behavior and performance. If you notice a general upward trend in price, then this is a good option for you. It means that you will be in a position to take advantage of the continued growth of the company.

This concept speaks to the easiest way to make your profit. You should always buy a share whose value will increase. Your profit is the difference between your buying price, and the new, increased price of the share you have chosen.

Factors Affecting Stock Price

One of the fundamentals affecting stock price is demand. When more people want to buy a particular stock, its value increases. Always look for information about the stocks you have chosen.

This will determine the overall direction it is expected to take. If you make the decision to trade as an individual, look for an expert advice on the indicators that you should pay attention to.

Work with the Right Financial Partner

Companies that handle people’s stocks are paid through commissions deducted from your profits. Shop around and compare rates, if you want someone to handle everything on your behalf. Compare also, the returns they have been able to get for their investor’s.

Conclusion

The first step to becoming an investor in the stock market is to learn how the market works, and then having the right frame of mind. You should be aware of key factors influencing stock price, and always take a careful conservative approach.

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