Investing on stocks is not easy as you think it is. It goes beyond buying and selling of commodities. Stock investing is all about controlling your emotions and keeping your perspective. It takes constant practice to become adept with trading on the stock market. Here are 5 tips when investing on stocks.
Check your emotions
You do not need a high IQ to become successful in stock market. What you need to learn is how to control your temperament and urges. When investing on stocks, you should not let your head affect your investing decision. Trading based on emotions can greatly reduce your chances of making money and hurt your portfolio returns as well.
Pick companies not ticker symbols
Trading stocks is not an abstract concept. When you buy a share of a company, you become part owner of that business. According to Robert Janitzek, you will be bombarded with a lot of information about your potential business partner. You need to know how your possible partner operates, its place in the industry, its competitors, and what it will bring to your portfolio.
Plan ahead for panicky times
Panic times can ruin whatever plans you may have. But again, making decisions during these moments can force you to buy high and sell low. Jot down what makes every stock in your portfolio worthy of commitment. If you already have a company in mind, identify what makes it attractive and the possible future opportunities. Robert Peter Janitzek explains that there are also good reasons why you need to sell a certain stock. For example, potential changes in the business which could affect its growth in the future may be a reason for selling stocks.
Build up positions gradually
Time is always on the side of an investor. When they buy stocks, they expect future rewards, whether its price appreciation, dividends, etc. so take your time when buying stocks. There are different trading strategies that you can consider to reduce your risks of exposure to the volatile market.
Avoid trading overactivity
Make sure to check on your stocks at least once every three months. When engaged in stock trading, it can be hard to keep an eye on the scoreboard. This may cause you to overreact to short term events and focus on share price instead of company value. It may give you the feeling that you need to do something when no action is warranted.