If you are planning to enter the rewarding equity market you’d be searching for stock trading strategies. It’s your early days in the market and you will need to be cautious about every step you take. Let us take you through five stock trading strategies that you should keep in mind as a beginner.
1. Set Aside Time & Money
Stock trading is a serious business and not for part-timers. While you may enter the delivery market as and when you like but if you wish to get into day trading you need to set aside time and money. You will need to keep updated with news and information on the smallest factors that can affect the moment of these stocks. You need to invest your surplus savings which you don’t have a need for in the immediate future even in there is a minor crisis in your life.
2. Test The Waters First
Your first few trades would decide whether you will say goodbye to the equity market or become a pro. Most people quit after suffering big losses in their first few trades. Hence the most important among stock trading strategies for beginners is to start with small trades both in terms of quantity and volumes. Don’t bet a substantial part of your capital at one go. Your good bets and bad bets will teach you important lessons in stock trading and serve you for life.
3. Say No To Penny Stocks
Every beginner's guide to stock trading would say this and we reiterate it here again. Don’t get into penny stocks or stocks which trade at under $5. While you may have heard people make 10-20% in these stocks in a day, such days are rare and also low volumes may not allow you to sell them when you want. The odds of these stocks getting delisted are also very high. These stocks trade merely on speculation and not on the actual functioning of the business.
4. Know-How Much To Spread
If you have browsed enough for the best stock trading strategy, you’d have come across advice to diversify your investments across different industries and also among small, medium and large-cap companies. However, don’t over diversify while trading as it would become nearly impossible for you to keep track of the news regarding these stocks. Target 5-6 good stocks in your infant days and don’t go beyond than unless you become a pro.
5. Start Learning Technical Analysis
Last but not least once you feel you are here to stay in the market you have to learn the art of technical analysis. While fundamental analysis is important when you are starting out in the market for day trading the knowledge of technical analysis is a must. You can’t depend on message boards and stock experts to share their call with you. You must learn to read the charts and make your decision based on those charts.
Keep these five stock market strategies for beginners in mind when you are starting out trading in the market and you will be able to make profits and build your portfolio over time.
Summary – In this write-up, we look at some of the stock trading strategies that beginners should know when they are starting out trading in the market.