By Asoka Samarakone
Fascinating, isn't it, this stock market of ours, with its unpredictability, promise, and unscripted daily drama. As we continue through 2011, much uncertainty still exists in the markets. While everything is down in price, as it is now, there is actually less to worry about. But your portfolio can overcome this volatility… and produce profits... if you know where to invest. Take comfort in knowing you’re still able to profit during these events.
Human nature urges us to want more, more, and more. It isn’t enough. We need more. Nowhere is this truer than when it comes to investing in stocks. Before investing in any of the stocks, do your due diligence research and never invest more money than the one you could afford to lose.
Do your homework before taking any decision on investments.
Choosing which stocks to invest requires effort, a disciplined and focused approach, and a dedication to learning your craft that's synonymous with learning any profession or trade. There's no secret ingriedient when it comes to share trading - easy, overnight success is almost impossible to come by, and those setting their sights on short-term millions will be sorely disappointed.
When trading, your aim is to make a quick profit. Not every trade you make will be a winning trade, so you must make sure that you make more money from your winning trades than you lose with your losing trades.
There are always people who know what is going to happen before it happens and they either start selling or buying ahead of the event, or rumours are triggered and people in the loop take early positions. If enough people buy a stock, its price will go up (usually), due to the simple law of supply and demand. If enough people sell a stock, its price will go down.
Learn to take small profits when you begin. Learn how to pick up those stocks that trades at a relatively low price and you will be on your way to a nice big trading account. Learn new ideas, keep up to date, and don’t trade other people’s ideas. Have a plan.
This way you will learn which strategies work for you in the long run and which don’t. When you start trading, you may well lose more than you make. Think about what you did wrong and try not to be emotional about the trades. If you stick to your game plan and learn, hopefully your profits will outweigh your losses.
There will always be trading opportunities, so be patient and strike. Find out what works best for you and make a habit of doing your homework. You’ll trade more decisively and reap the benefits of daily preparation!
A mistake that many traders make is allowing a profitable trade to turn into a break-even or losing trade. Don’t let this happen to you. Most traders hold onto stocks too long. They are afraid they will sell too early and the price will keep going higher and higher and they will miss the big winner. Get used to taking profits no matter how small.
It may help to learn to take small profits when you begin. This gets you in a winning state of mind and makes taking profits much more of a habit. You do not need to buy at every low and sell at every high in order to make a lot of money in the market. You just need to be consistent. Do not be greedy. This will be the death of your trading account.
When you’re an investor you are going to have trades that go against you. It happens to everyone. Don’t chase stocks. There will always be another trade right around the corner. The last thing you want to do is over-pay because you see a stock moving and think you are missing the boat. Always buy slowly when prices fall and sell quickly when targets are reached.
Be patient with your plan and think of it as a long-term voyage to a specific destination --- change direction infrequently and gradually. With a determination to learn and an eagerness to continue to learn your trade, what's stopping you from joining the best?