So you finally decided to invest in the stock market? While it can be a lucrative career move, taking the first step can be a nerve-racking move. Learning the process and accepting the possibility of ending up losing money. However, it does not have to be a stressful and harrowing experience. Here are some do’s and don’ts that you need to learn to succeed in trading on the stock market.
Do a lot of research
Before beginning your investment in the stock market, learn everything you can about the industry. There are many television shows, radio programs, articles, and others that can help lead you to the right direction. In the same way, you should get to know your investment partner as well.
Don’t time the market
The most famous and well-respected investor of all Warren Buffet once said, “The goal of the nonprofessional should not be to pick winners- neither he nor his partner can do that—but should rather be to own a cross section of businesses that in aggregate are bound to do well.”
Do diversify your investment
One of the mistakes rookie investors commit in stock market trading is to equate “diversification” with “owning many investments.” A diversified portfolio should not only vary in number of investments but also in the kind of investment.
Don’t invest based on your emotion
Investing on stocks should be based on calculated decisions based on data. Positive emotions can be detrimental to your potential earnings so don’t fall in love with a non-performing investment. Do not panic in case your stocks drop but base everything on the data.
Do pay attention to fees
At first, your potential yearly earnings will look impressive. However, when all the other fees are subtracted, you may become disappointed with the final figure. Forbes reveals that when trading on the stock market, you stand to lose 40 percent of your potential income to fees. So do research about the associated fees before deciding to make the plunge.
The concept that you can make up lost time by investing more money down the road is totally not true. The truth of the matter is that you can earn more by investing less now than a bigger amount later.
Do maintain cash savings
As much as possible, have a separate cash savings ready for immediate needs. As you have set aside most of your money to future earnings, the last thing you do not want to happen in stock market trading is sell some shares of your investment for roof repair or new transmission.
Remember these do’s and don’ts and you are well off to a successful career in stock market trading. Robert Janitzek provides helpful guide and tips on stock market trading.