If you are a beginner in stock market, I am quite sure you are searching for some tips to get success in the market. Getting success in stock market is not an easy and it is not possible for everyone. For those who are intelligent, stock market can be treasure, but for those who doesn’t have intelligent mind, it have power to destroy them. Today, you will get 10 powerful tips for success as a trader in stock market.
If you are a long term investor then you don’t need to worry about the tips. Your main focus should only be on the fundamentally strong companies which provides yearly good return to investors and can perform best in future. But if you are a trader in stock market then you must need some tips of expert that can save you from failure.
So, In this article, I have shared 10 tips for success as a trader in stock market. These are the golden tips that almost all successful trader follow to trade and make profit in stock market. Topics covered in the article includes, concept of trading in stock market, difference between investing and trading, 10 tips for success as a trader in stock market, and should invest or trade to become successful in stock market.
What is Trading in Stock Market
Trading refers to buying and selling of share for for short period of time normally for one week or one month like that. In trading, people buy share and sell them within a short period of time. They do not hold the share of any company for long time period.
For example: suppose you bought the share of ABC company at the price of $4 per share. After a week, the price increased to $5 and you sold the share. You decided to book the profit of $1 per share. This will be called trading for you.
Becoming a successful trader is more harder than becoming a successful investor. This requires:
- Intelligent Mind
- Understanding capacity of market nature and situation
- Regular focus on economic and political news
- Capacity to take risk
- Patient and stable mind
- Friend circle of intelligent people and share market experts
Difference Between Investor and Trader
The basic difference between investor and trader is that an investor buy share of a company for long period of time like 5 years, 10 years etc. But, a trader buy the share of a company for short period of time like one week, one month, two month etc.
Different people have different point of views about investing and trading. Some people like investing whereas some people like trading in share market. Period, capital growth, risk, these are some of the factors on the basis of which, we can differentiate investing and trading.
One of the well known fact of stock market is that trading is more risky than investing. But, if you want to hear my point of view then I would like to say that investor and trader, both are right at their places.
To decide what is best for you either investing or trading, it depends on many things such as your requirement and expectation, your income and family background, capital, risk taking capacity, your knowledge, market situation etc.
For example: let’s suppose you have great knowledge of share market, you can also properly analyze market situations and have risk taking capacity then I would suggest you to become a trader. Because I think, an intelligent trader can make more profit than a long term investor.
But if you don’t want to use your brain and time period doesn’t matter for you then I would suggest you to go for investing. You should buy the share of good and fundamentally strong companies which is providing and can provide even more return in future and leave that share for long period of time.
There are plenty of example that people have made billions from investing. In long run, it is assumed that investors always make profit. Because if company is strong, the company’s growth multiplies and by the time your return also multiplies.
10 Tips For Success As A Trader In Stock Market
1. Do Not Trade if you are a Beginner
Trading of stocks is not best for those who have just entered into share market. As a beginner, you may have less knowledge and do not have practical knowledge about the market. So, in starting you must ignore trading habit.
If you enter in share market with the purpose of trading from starting, there is high chance that you will be kicked off permanently from market. You must avoid making profit at short time unless you have sufficient experience and knowledge.
2. Don’t Invest Too Much
In share market, it is best to use your partial capital for investing purpose and partial for trading purpose. One of the best advice in share market is that never use your entire capital at same time. Either you are an investor or trader, you must save some proportion of your capital for opposite market situation.
In share market, keeping your capital safe is more important than making profit. So, if you use your full capital and if anything goes wrong then there will be high chances of heavy loss and capital loose. Saved capital can also be used for averaging of price of share.
3. Be Patient
Patience is the key of success in stock market. Either you are an investor or trader, if you don’t have patience, you can’t success. As a trader, you must have control over your emotions and you should take your buying and selling decisions being patient in the market.
Quick decision in the market van prove danger for you. If you have patience, you can take right buying and selling decision at the right time. It can save you from possible loss that can happen due to nonsense market rumors and news.
4. Be Disciplined
For getting success in any work, discipline is must required thing. As a stock trader, you must also implement discipline in your trading activities. You must follow your trading strategies and plan being disciplined.
For example: If you have bought the share of ABC company at a price of $10 with a target to sell it at $12 if market increases and sell at $8 if market falls, then you must follow this strategy in a disciplined way. You must keep yourself away from greed and fear.
5. Understand Market Situation and Nature
If you are a trader, it is very important to analyze and understand the nature of market according to situation and time. For this, there are many factors that you should have focus on such as news, government policies, international market situations and conflicts, country’s economic and political situation etc.
By understanding market situation and nature, you will have an idea about where market can move in upcoming days. If helps you to know market is in bullish or bearish situation which is good for a trader.
6. Don’t Be Afraid to Grab an Opportunity
It is believed that share market is full of opportunities. It depends on you how you see and use that opportunity. As a trader, you should always find all possible profit making opportunities and grab it on time.
When any opportunity come and you have faith on it then you should not be afraid and should not think too much. You just have to grab it and use it for making profit. Using right opportunity at right time is the habit of an intelligent investor or trader.
7. Keep Close Eye On News and Incidents
News and incidents has great effect on the market. It can bring sudden rise or fall in the share market. So, to become a successful trader, you must be updated about the news and incidents about the news and incidents that can directly or indirectly affect the market.
For this, you must encourage the habit of reading news paper, watching news TV channels, following online medias etc. You should also have ability to analyze the good or bad effect of that news in market.
8. Don’t Take A Lot of Risk
One of the famous quotation of finance is that ” Higher the profit- Higher the risk, and Lower the profit- Lower the risk “. Sometimes you have chance to make higher profit from trading if you take big risk according to situation.
But taking big risk can also prove danger for you. The life of many investor or trader has been destroyed because of this. So as a trader, always try to make good profit from minimum risk.
9. Learn From Experience
If you are a trader, you should always learn from your past market experience. An experienced investor or trader always make good profit than new investor or trader. You should be able to analyze the present market situation on the basis of same past market situation.
If you know how to use past experience then there will very less chance of doing mistakes in trading. Because you have already faced same situation in the past.
10. Keep Close Eye On Successful Investor or Trader
To become a successful trader, you should always be aware of other successful investor’s or trader’s behavior and actions in the market. You should keep close eye on what they are buying or how they are actually dealing in the market in the present situation. It helps you to learn a lot from them and understand the market from other expert’s point of view too.
Should You Trade or Invest To Become Successful
To become successful, nobody can answer you, should you trade or invest. It is you yourself who can know what is best for you. For this, first you should understand the benefits and disadvantages of both the investing and trading and then choose the best one for you.
Generally, to talk about world’s top successful persons in stock market like Warren Buffet, Rakesh Jhunjhunwala etc. they all use almost 60-70% of their capital for investing and 20-30% of capital for trading. Most of them have achieved great success from investing rather than trading. But, in my point of view, if you can do trading with intelligence then you can make bigger profit than investing.
So this is all about our today’s article on the topic ” 10 Tips For Success As A Trader In Stock Market “. I hope you found it informative. I request you to give your suggestions and feedback in the comment section below. Thank You !
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