Trading on the stock market is one of those areas that I find really grey and hazy. One of my earliest memories of CNN is hearing people talking about Wall Street and seeing what looked like a hundred people in a room with two hundred televisions. It looked like a mass of confusion and chaos. I know now that trading can take place in a very calm environment that’s controlled and organised the complete opposite of the CNN visual imprinted in my mind.
I’ve thought about trading on the stock market a few times, but I never made any attempts to do so. I would not know what steps to take. That’s exactly what led to the creation of this post. I asked around and came up with a list of tips for trading on the stock market.
- Be clear about what you are trying to achieve – I guess most people trade on stock markets to make money, but others trade to preserve their income and even as a method of planning for their retirement.
- Get an advisor – This is someone who you should trust or who comes highly recommended and has a good track record.
- Get a trader – Make sure that this person is not your advisor. You should also have some trust this person.
- Do your own research and read up on the companies that you’re interested in.
- Diversify your portfolio
- Understand relationships within the various industries – e.g. the performance of automobile stocks can be affected by oil stocks etc.
- Don’t be fooled by big words
- Past performance is not always a definite indication of what will happen in the future.
- Monitor your portfolio to see how it is performing
- Keep abreast of current affairs because they could ultimately affect your portfolio
- Make use of the free resources that are available – For e.g. the Financial Times, Investopedia