The stock market is a volatile one which could leave investors confused whether to buy or sell. Making money from stock market trading is not that easy. You should be patient and should have discipline. While there is no sure formula for success, there are certain rules to follow to increase your chances of getting a good return:
1. Avoid the herd mentality
Do not let the action of other traders, neighbors, or relatives influence your decision to buy. This strategy could have detrimental effects to your investment in the long run. As the world’s greatest investor once said, “Be fearful when others are greedy, and be greedy when others are fearful.”
2. Make informed decisions
Proper research is necessary before trading on the stock market. Investing based on the name and the industry where they belong is not the right way of putting your money on the market.
3. Invest in a business not in stocks
Avoid making the mistake of investing in stocks and invest on a business instead. However, make sure that you understand the business you plan to invest in.
4. Do not time the market
Timing the stock market is quite impossible. Catching the tops and bottoms is a myth. It will only cause you to lose than make money. Even Warren Buffet does not try to do it when trading on the stock market even if he has knowledge of the price levels that is appropriate to individual shares.
5. Be disciplined when investing
Investing in the stock market requires discipline on your part. You need to put in the right shares and be patient if you want to see outstanding returns. A disciplined investment approach is necessary for success in the stock market.
6. Do not let emotions cloud your judgment
As an investor, you need to have the ability to control your emotions. When the market is bullish, the lure of quick wealth is difficult to resist. Being greedy when involved in stock market trading can cause you to speculate and buy shares from unknown companies. In a bear market, on the other hand, your fear may cause you to panic and sell your shares at rock bottom prices. So never let fear and greed control you when investing.
7. Build your portfolio
For optimum results when investing in the stock market, you need to build and diversify your portfolio. How you diversify will depend on your capacity to take risks.
Remember these rules and you will find success as a stock market trader and receive huge returns in the process.
Robert Janitzek provides tips and guides on trading on the stock market. Check out his blog at www.robertjanitzektrading.com.