Tag: Stock traders

  • The golden rules for investing in the stock market for beginners

    The golden rules for investing in the stock market for beginners

    The golden rules for investing in the stock marketWhat rules every investor should follow if want to be successful? Read to the end.

    By Guy Avtalyon

    Every field has golden rules, so this one has too.

    Fast money and easy earnings are mostly what young people want to succeed in the business world.
    They are attracted by exchanges, money is invested in shares.

    WOW!

    However, there are many curves, curvatures, spirals, and twists that, and if you don’t know how to avoid them, your trip to the stock market can be very short-lived.

    What are the golden rules for investing in the stock market, which should be known primarily to beginners in this business, but also to more experienced stock traders?

    Create a portfolio one of the golden rules

    You can do this in a simple way. There are many free portfolio managers on the Internet, so use some of them to make a free account.

    Create a fictitious portfolio in which you would potentially invest and monitor the situation for a while, a minimum of one month. This will give you the best insight into market volatility.

    Before you take the first step, the goal is to create a profitable fictitious portfolio as an investor on the stock market. This is really the golden rule.

    Among other Golden rules: Read business magazines 

    In order to successfully start investing in the stock market, you need to be aware of the world’s stock market. Also, what are the social events that affect the rise or fall of the price of shares?

    There are many respectable business magazines dealing with this topic (Forbes, The Economist, Kiplinger’s are some of the most famous ones).

    Follow the events in the global economy and finance and you will be able to swim more easily in the very turbulent waters of the stock market.

    Buy stock from a field you know well 

    Before investing money into something, you should understand the business the company is dealing with.

    The first stock you will buy on the stock market should be from the sector you understand and it is familiar to you.

    For example, if you know the banking sector, try to explore the market and find a bank whose stocks are good and worth investing.

    Never invest in the action itself, but in the company. This is one of the best golden rules I ever got. 

    Have realistic expectations

    There may be a problem if your financial goals are based on unrealistic presumption. Try to be realistic in your ambitions and goals. This will the most important golden rule for novices. 

    In this way, there are fewer chances to lose money or be disappointed in your stock market business.

    Do your own research one of the most important golden rules

    You will hear from people who are dealing with the stock exchange that they have bought some stocks. Just because the same was done by their friend or family member who understands this business.

    Accept everything with reserve. Before buying a stock, do research. If some stocks brought in earnings in the past doesn’t necessarily mean that this trend will continue.

    Always believe more to yourself than other people’s estimation.

    The stock exchange is NOT a money-making machine 

    This is one of the Golden rules. Most of those who want to participate stock market, have an unrealistic desire to double or triple investment in the short time frame.

    If you are one of them, then that’s not a job for you. For those who want to invest, 10 to 12% of the earnings for a long period is quite a good investment.

    You need to realize that you are just a small fish in a big lake and that your success depends on many factors. Some traders became really successful when they realized this golden rule. 

    Follow the clues and make conclusions.

    3 or 4 good stocks are enough 

    Don’t overplay is truly a golden rule. Especially because you are a beginner in this business. More than 10 stocks are a good portfolio, but for investment funds.

    It is true that they make more profit. But if you make a smart and wise decision you will earn enough money. Golden rules should be known to beginners in this business.

    Don’t try to predict the stock price

     Not even the biggest billionaires and owners of the largest multinational companies in the world are doing this.  No one is able to predict, at least for a longer period, several stock market cycles.

    Ability to guess the moment when the stock will have the highest value is still a myth. Even for those who have an insight into the business of some companies. Therefore, for successful business and investing in the stock market, you need to acquire certain knowledge and skills.

    According to many kinds of research, the risk of investing in the stock exchange is most often taken over by young people who have just finished college.

    But, like in every other business, the experience you get, will help you to be wiser in making decisions in the future. 

    That’s how it works!

  • What Is better: Trading or Investing and what are the differences?

    What Is better: Trading or Investing and what are the differences?

    2 min read

    Let us explain the differences between traders and investors, at first.

    Stock traders are individuals (or entities) engaged in the trading of equity securities, or the transfer of other financial assets.

    They work either for themselves or on behalf of someone else.

    They may operate as agents, hedgers, arbitrageurs, speculators, or investors.

    Stock investors are individuals (or entities) who use their own money to buy equity securities. The goal of the stock investor is to gain returns, which come in the form of income, interest, or appreciation in value also known as capital gains.

    DIFFERENCES BETWEEN TRADING AND INVESTING

    Investing and trading may often be classified together.

    But, they are both different ways of attempting to profit from the financial markets.

    The goal of making investments is to progressively increase wealth over a long period of time by using the buying and holding of a portfolio of stocks, mutual funds, bonds and other methods of investment.

    Trading involves short-term buying and selling of stock and commodities such as currency pairs and other instruments. The goal is earning profitable returns which outperform a traditional buy and hold investing.

    For example, while most investors may be satisfied with a 10% annual return, traders may seek to achieve this per month.

    Period of acting

    Return on investment and payback period seem to be the two most commonly used financial metrics for making sustainability investment.

    Trading is a method of holding stocks for a short period of time. It could be for a week or more often a day! The trader holds stocks until the short term high performance.

    On the other hand, investing is an approach that works on buy and holds a principle.

    Investors invest their money for some years, decades or for the even longer period. Short-term market fluctuations are irrelevant in the long-running investing.

    Growth of capital

    Traders look at the price movement of stocks in the market. If the price goes higher, traders may sell the stocks.
    So we can say, trading is the skill of timing the market but investing is an art. 

    The real art of creating wealth by compounding interest and dividend over the years by holding quality stocks in the market.

    Risk of both fields

    Both, trading and investing, include risk on your capital.

    But trading involves higher risk and higher potential returns. The price might go high or low in a short while.

    Investing takes a while to develop. It involves comparatively lower risk and lower returns in the short run. But might deliver higher returns by putting together interests and dividends if held for a longer period of time.

    Daily market cycles do not affect much on quality stock investments for a longer time.

    Essentially differences

    Trading is a one day match while investing is a championship.  

    Similarly, traders are skilled, technical individuals, they learn market trends to hit higher profits in the stipulated time. It is related to the psychology of the market.

    Investors, on the other hand, analyze the stocks they want to invest in. Investing also includes learning business fundamentals and commitment to stay invested for a longer-term.

    It is related to the philosophy that runs the business.

    Traders put money in a stock for a short-term,  buy and sell fast to hit the higher profits in the market. Missing the right time may lead to the loss.

    They look at the present performance to hit the higher price and book profits in the very short term.

    Investors keep themselves away from the trends and invest in value.

    They invest for a longer period of time keeping the attention of the stocks they hold. They wait till the stock reaches its potential.

    You are the one to decide is your goal  trading at a higher price making a smaller profit in a short time. Or holding/investing on and sell at much higher price in the long run is what you aim for.

    A key rule of trading is to only do so when you are certain that there is an upcoming future event which is predicted to drive the stock value of an organization or entity higher.

    When trading, there are certain strategies which must be put in place.

    Traders should take note of the news and use it to make an educated decision which will hopefully enable them to make a profit afterward. This shows the difference between trading as a short-term investment and investing as a long-term method of gaining wealth.

    When investing, the goal is to bank profits over the long term.

    With dips in value simply providing the opportunity to buy more of the commodity in question. Investing means sitting it out when the commodity rises in value as there will likely be more good news ahead for the company and more profits to be made.

    If you are new to the world of investing and trading, it’s important to know which you are going to choose.

    The imperative to increase your financial gain is what defines it.

    Knowledge of the subject is important. 

    If you are knowledgeable about the stock market but have little idea about how to trade Forex, for example, you will naturally head over to the stock market for your first investment.

    General advice: Don’t get investing and trading confused – it could seriously hurt your portfolio!