Today we will discuss about the 6 ways to make profits from the market. But first lets ask yourself some questions before diving in.
Are you following tips/recommendations from friends or so called guru’s blindly without any proper research by yourself?
Do you know when to exit and book your profits?
If you don’t have answers for the above questions or you are not satisfied with answers, read to the end.
Though there being many people who made it big from trading the equities, but its not that easy. For making that big one should be so patient, self-disciplined. And it also requires good amount of research on the markets.
In the recent months the market is being so volatile and left traders in confusion whether to hold or sell. There is no perfect formula for markets that can give 100% assurance on the market situations. But there are some rules to get profits consistently…
1. Know the type of Trader you are :
There are basically 2 types of traders in the market.
- Fundamental investors
The major difference between these 2 types is that how they see the price of stocks. Fundamental investors gives less importance to price, they give priority to business behind the price. Business includes management, product, model they follow. But on the other hand speculators give importance to price. They follow the technical analysis, where they do not do any research related to business behind it. They follow some indicators like head & shoulders, shooting stars, MCAD, EMA 200, DMA 200…etc and these strategies built up on the historical data of the stocks. This can be called as price action trading.
2. Always have Realistic goals
You can expect best from the investments you have made, but if you don’t have realistic goals you may get in to some real trouble. Never expect same results from the markets.
Realistic goals can be short term and specific to a stock like target price. Before investing in a stock calculate ‘how much money you will make’ in this investment. Of course, you need to make a few assumptions to do this calculation. But do calculate. Most often investors tend to ask the share is undervalued or overvalued. let a share be price 100 and set a goal that if i get some 20% returns i will book my profits.
3. Trust your Intuition
Understand what makes up your value system and own it. Live it. Work it. If you don’t start leading from within, taking control to acknowledge your own values and beliefs and the person that you are on the inside, you will never be capable of being the better person on the outside. This system is unique to you and it is your responsibility to take ownership. There are times when it will be challenged or when you will give in to other’s values—and you will look back and wish you had trusted your intuition. That intuition, that gut feeling? Don’t ever mistrust it. It is a key part of you, and you should learn that it is one of your best assets. Ignore at your peril.
4. Have a disciplined approach
Study the history of markets, and one would notice that even the best bull runs have given many panic moments to the investors. The people who dont have disciplined approach have struck with these panic moments and lost money even in the best bull runs. But the people with a plan/disciplined approach have made outstanding returns of the market. so make yourself a disciplined approach now. In the next post I will be sharing an approach I follow so stay tuned 🙂
5. Always stay away from “THE HOT STOCKS”.
The hot stocks are those stocks which have some attention catching activity such as severe volatility in share prices, high trading volume or when the stock is in news. Stay away from these hot stocks.
Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.Warren Buffet
6. Look at quality businesses; not just the stocks.
Do a little research on the Business behind the price. Checkout the balance sheets at least for past 5 years.
When I buy a stock, I think of it in terms of buying a whole company, just as if I were buying a store down the street.Warren Buffet
If you are buying a shop, you will analyse about the products dealt by the shop, overall sales, consistency of sales, competition for the shop, competition strength of the shop, how the shop will manage the change in customer trends and so on. We need to apply a similar logic before choosing a stock. Don’t think that you are only buying a few shares of that company. Will you buy the whole company if you had enough money?
Greed and FOMO( fear of missing out) are the two main things that cause losses
Never chase a running stocks and book the target profits no matter how much the stock grows. You might not know when it will dip. So book the profits at targeted price.
I am using this beautiful tool https://www.screener.in/ for my analysis on Indian market shares. It helped me alot with for doing some quick analysis.
The above mentioned are just a simple tips that can make lot of difference in your trading journey. Happy Trading 🙂
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