How to mitigate the risk factor in stock trading?


New Delhi [India], September 6 (ANI / ATK): The stock market is the only financial instrument in the world where millions can be earned by investing by the hundreds and it is also the only financial instrument where millions can be lost.

Therefore, it is very important to take care when investing or trading in the stock exchange, especially as a beginner, as beginners are extremely prone to mistakes.

The way to avoid huge losses in the stock market is to first build your knowledge base by familiarizing yourself with the basics of everything there is to know about the stock markets.

There is a huge amount of free material available online at sites like Top10StockBroker, YouTube, Google, Quoraetc. to support you in your stock market journey.

Now, there is no hard and fast rule on how one prepares to invest in the stock markets since each individual has their method that works for them.

But there are a few precautions that any investor or trader should take, whether professional or novice when investing in the stock markets.

And in this article, we are going to tell you about these important factors that will help you mitigate the risk of rick in the stock market – Selecting Stock Brokers While most people don’t put any importance on selecting a broker, but you should do it. A good broker is essential for a worry-free investing experience.

Deal only with market intermediaries registered with SEBI or stock exchanges.

When selecting a broker, the important things are decent goodwill value, great transaction fees, user-friendly UI design of their platforms, and good customer support service.

If you are still having trouble selecting a good stock broker, JustRisk and Return FactorRisk and return are directly proportional to each other in the stock market. All stock market investments involve some risk.

Return on stock investments is not guaranteed, be careful with stocks with high prices and high risks. Always remember, let your profits last a long time and cut your losses ASAP.

Stock Market Basics You need to know how the stock market works, learn basic terminology (order types, bull market, bear market, entry / exit charges, stock symbol), learn to read financial statements , balance sheets and the meaning of important ratios (debt to equity, book value, market capital, etc.) Before starting to invest in the stock markets, a person should have a clear investment objective. An investment goal is a plan you make for yourself and your family about things you might need or want in the short term, long term, and in retirement.

Most importantly, never invest all your savings in the stock market as they are subject to market risk, go for safe investments like FD, PF, insurance policy, mutual fund, NHAI government bond, etc. They are much more secure and will act as a hedge in bear markets.

Don’t Ignore Expenses As you pay brokerage and securities transaction tax on sale / purchase, capital gains tax in case of profit, you should select a brokerage firm according to your purpose investment.

If you want to invest for the long term, then a full service broker would be right for you as they provide a lot of additional services that would be useful for long term investors and discount brokers are good for intraday trading as their transaction rates. are very mooing.

Control Your Emotions Don’t make hasty decisions based on overly optimistic corporate rhetoric, irrelevant news, rumors and choose actions through the herd mentality. Think wisely and make a logical decision based on facts.

Never Predict the Market A wise investor stays away from speculation and makes investment decisions based on statistical data and fundamental facts about the company.

Most novice investors try to make a profit by thinking that they can predict the market, that they can buy low and sell high without having to research the company or financial statements, etc.

In trading or investing, this thinking process never works in the long run, you may be successful 10% of the time, but you will surely fail 90% of your trading journey.

Technical Analysis Fundamental analysis is essential to success on the stock market.

If you know that a particular company has strong finances which are inherently powerful, then you can certainly think of buying its stocks in long term lows because you know that company will grow over a period of time.

You should never believe the advice of Youtubers or social media influencers, always go with people who have 10 to 15 years of experience in this industry.

Again, it is very important that you don’t blindly believe anyone, take advice, do your own research, and then invest only when you are convinced of the tip.

This story is provided by ATK. ANI will not be responsible for the content of this article in any way. (ANI / ATK)

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