Basic Understanding of Stock Market

Nothing’s more fascinating for me than the rising and falling of stocks and shares in the stock markets. The thrill and risk can pique anyone’s interest.

Stock Market is the best type of investment if you play it smart and logically. You can’t play for the rush and try to take the shortcut here because taking the shortcut never worked out for anyone.

People have this notion that the stock market is very risky and people have gone bankrupt because of it but isn’t it just one side of the coin! What they don’t know is that those who did suffer this misfortune weren’t the wise ones. They took foolish decisions and underestimated the market, thus facing dire consequences.

I would definitely suggest investing (long-term investing) in stock market but I will never tell you to take stock market as poker where you will hit a jackpot and the next moment you will be Warren Buffet. You can only be safe and risk free when you take the right step at the right time and not aim for high returns in a short period of time.

Some points to keep in mind if you are trying to enter the stock market:

  1. Enter the stock market only if you want to invest.
  2. Don’t follow blind advices. Research yourself and find the stocks where you want to invest your money in.
  3. Start small. Don’t go around buying massive amount of stocks immediately. Buy maximum 5 or 10 in the beginning.
  4. Be regular. You can’t just buy stocks and leave it the way it is waiting for it to magically double up. You have to keep a track of the market and study the trends carefully.
  5. Don’t attach your emotional feelings to any particular stocks or companies because if the company’s trend isn’t going well then you won’t be able to part from it.
  6. Analyze both the fundamental and technical aspect of stock market.
  7. Try to engage in variety of stocks i.e. stocks from several type of industries and not just one single industry. So if one industry suffers, you will have others to rely on.
  8. Don’t invest all your life savings to it. If you are young then invest 90% of your earnings in stock market and other alternatives and take the remaining 10% for your expenditure. And as you grow old spend more and invest less.
  9. Don’t just follow the herd. Go with what you feel is right.
  10. It’s okay if you incur some loss initially. you just have to be patient with yourself and understand that learning takes time.

With these pointers you might get a clear idea of things, if stock market is a foreign term for you. And for the veterans, I hope I could get some advice too.