Important Investing Principles That You Should Follow
The principles listed are given by some great investment advisors and therefore you too should follow them when you do online stock trading.
Stock Market image by Investment Zen
There are various great names in the world like Warren Buffet and Benjamin Graham that gave some timeless principles for trading and investment to the world a long time ago but considering its greatness, these principles are still followed. Although with time the types of investment options have increased widely, there are still a few basic principles of share market investments that you too can follow to ensure that you put in your money at the right place and get the best possible returns.
Safety constraints:
No matter if you are a big billionaire who never have to think of how to spend or invest the money or someone who has a fixed income and want to invest it in such a way that it grows, keeping your investments safe should always be the first principle of stock market investment that you should abide by. There is a term called margin of safety, which means that you invest your money at a place where the risk of meeting losses would be minimum. So follow this simple principle as soon as you begin trading in stocks.
Dealing with the market’s volatility:
Indian share market is very volatile in nature and therefore you as a trader should be aware of how to deal with this volatility and make deals that turn this risky situation profitable for you. As an investor you should know that you are putting your money at a place which involves a lot of risk. Try to develop thinking where you have an understanding of various facts that affect the market’s performance and how you need to make the most out of it instead of getting scared and taking a back seat. For instance, if you see that the market is going very low, consider buying the shares and sell them out on a higher price as soon as the prices go up.
Choosing where to invest:
A good investor is the one who knows which areas are appropriate as per his/her understanding rather than putting the money over some share only because someone suggested you to do so. Remember that you should preferably invest only in the areas and companies you know about and have heard of. This will make sure that you understand their business and therefore how they’d get affected and their shares would react to certain effects.
Go for brands:
It is always advisable to go for those companies that would prove to have a long term work advantage. Moreover, rather than risking your investment in a company that has just registered itself on the NSE it is better to go for a company that is known for quite some years and have a few good names of the industry leaders associated with them. If a company’s board and management will be strong, their shares’ chances of not performing well steadily would be close to minimum.
The principles listed above are given by some great investment advisors and therefore you too should follow them when you do online stock trading.
