I’ve seen many persons who have stopped to invest in stocks after making loss in it. If you are one of them or you are going to start to invest in stocks, you must know the winning strategies to save yourself from losses and achieve whatever you wish. If we follow the principles made by successful investors throughout the world, we can easily and consistently make profit in the stock market. Here, they are-
I.Decide your investment capital carefully : Several people put all of their savings in stocks and sometimes they loose everything. It’s a wrong decision. You must start you stock market investment with a very small amount which you can loose without any hesitation.
II.Choose your stock carefully : Never choose any stock by the recommendations of other people or experts speaking on TV only. Pick any stock to invest on the basis of your own research and analysis.
At first make a list of stocks recommended by experts.Start your research with the first. Today there are several sites that make data available for stock research. You can find them by using Google search or any other search option.
However, I’ll explain you ‘How to analyze or research a stock?’ in another post, but here I’m giving you a few points to keep in mind while selecting a stock-
1.Is the profit of the company is growing year by year during the last 5 years?
2.Is the future of the company bright?
These two questions will certainly make you clear whether you have selected the correct stock or not.
But, if you don’t have sufficient time to search a stock for you, you must invest in some blue chip companies. Blue chip companies are those which have proved themselves in a long period of time.
III. Have a systematic plan to invest : If put all your money in a stock without any plan or strategy you may have to book loss many times. I would like to suggest that you should divide your whole money into 4 or 5 parts. Invest just one part at a time. If the start to fall and it falls more than 10% then invest the 2nd part and so on. This strategy is called Averaging.
IV. Pick more than one stock from different sectors : Sometimes a good stock of the present becomes a bad stock. Take an example of Satyam computers. So, never put all the eggs in the same basket i.e. invest in more that one stock at a time from different sectors. For example: If you choose one stock from banking sector then choose another from health sector.
V. Have patience : When you start to invest in stocks, patience is your best friend. Never try trading until you have sufficient knowledge about the stock market. Good stocks give huge return in a long period of time. Once the great investor Warren Buffet said that he can wait for infinite years to make profit from a good stock.
VI. Keep an eye on the performance of the company : This is the most important point if you have invested in one or more stocks. Today a number of apps are available which provide stock specific news. Give at least half an hour per day to know what’s going on in your company of investment. Go through the quarterly results of the company to decide whether to stay invested or to get out of it.