Analysis of Stock Market Behavior !
When a person wants to remain invested in stock markets there are a few things that need to be considered. Many people want to know about the art of making money from trading which is understandable since there is a huge amount to be made in the stock market.. Most of these are simple investors with limited income and they are eager to multipply their savings . But when the expected result is not got they become demotivated and give up altogether !
Stock market is very very volatile , It is the ups and downs in the market that provide a big opportunity to trade and earn.If the market remained stagnant there would be no opportunity to make any money nor trade. Once we realise that we cannot argue with the market, nor have any wishful thinking like hoping that the market will always favour us, we will be able to deal with the market the way it needs to be. Thefluctuations in the stock markets occur partly because companies make money, or lose money, but it is much more involved than that. A stock is only worth when someone will pay for it. Usually, if a company makes a lot of money, its value rises, because people are willing to pay more for a company's stock if the company is doing well and it can be the other way round when shares become totally worthless !
Market understanding and self understanding are both important while you decide to buy shares . According to Mark Douglas the author The disciplined Trader - Successful trading is the process of yielding to the market and being in control only of yourself and the way you respond to changing market conditions”. When the idea of being in control of yourself sinks in, you realize that you as a trader get exactly what you deserve from the markets. If you consistently get poor results it is because of something you have done or not done and you deserve this. If you consistently get great results, you deserve that as well . When you lose continuously , chances are that you get completely demotivated. And once the damage has been done, it will be an uphill battle to regain lost self-confidence as well , as it will take considerable amount of time to get back into the game of active trading.
Many traders advise a beginner to do some virtual trading using a notebook and pen and noting down the losses and gains on the paper of a few shares that you intend to trade in.This gives some experience and helps them when they begin to actually trade with real money buying stocks and shares.According to experts learning trading is a long and tedious process. They say that quick learners may need a couple of months to get to the point where they become competent traders, meaning they can cover their trading expenses. But for the rest , it may take 1-3 years or even longer. It takes about ten years to achieve mastery in any field and trading is no exception.
One should take particular care not to gve up on your trading account while you're still learning so as to keep yourself motivated during slumps. It is a known fact that 90% of all traders fail within the first few months and destroy their trading accounts and finances in the process.They normally give up after that.
Some useful tools
Technical analysis is one of the most important tool in stock trading. Being informed about the shares and their movement and trends (upwards or downwards ) help the investor to either sell or buy.These movements can be due to many factors like bad performance of the company or certain rules and regulations that could adversely affect the stock in the near future.In an unstable economy , anything can drive the market uwards or downwards even unfounded rumors and one has to be prepared for such events. One has to identify the risk and adhere to trading rules.
One should remember to take small gains and also small losses- this way you don't lose a lot of money.Most of the time traders lose out because of greed.Once you reach your target ,you should sell immediately and take your profit. This is also true of keeping a stock loss .When you see that the prices are likely to fall further it is better to sell your share and buy it back at a lower price.
It is important to buy shares at the right time.Ideally you should buy shares when the markets are recovering from a bear run and showing signs of an upward trend ! One should never buy shares in large quantities, rather add on each time there is a slump.
It is also very important to distribute your portfolio and your risk factor by buying different kinds of shares instead of concentrating on any one category For example:- Pharma,Finance,Crude,Tech,Oil,Textiles,Cement etc.
One should realise that trading is hard work that requires close and continuous involvement with the market and a hard-nosed ability to close losing trades.One should be ready to accept defeat from time to time.But at the same time learn from your mistakes , which is what makes you a better trader in time ! We should remember that There is a relationship between the stock market and every day news , so a successful trader needs to be well informed on day today issues !
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