Become a Successful Stock Trader by Validating Your Investing Characteristics
Many pros believe that saving is the same as investing. The truth is that they are diametrically opposed. Saving money in a bank account and occasionally managing a demat account will not make you a successful stock trader.
Saving Isn’t the Same as Investing
You are simply moving your money to a safer area when you change your usual spending and minimize expenses to save money. After that, you can put it in your bank account. When you keep it at home, the value does not improve. When you maintain it as a bank deposit, the appreciation is also insignificant.
Find out more: EMA in Stock Market
Even if you participated in other banking products, you would typically receive a tiny amount of interest that does not contribute to an increase in your overall asset worth. When you invest your money, on the other hand, the value of your primary amount fluctuates dramatically. Your money appreciates exponentially, doubling or tripling in value after a few months. This increase in money value is significantly greater than the monthly increase. So avoid saving at the bank because it will not make you wealthy. It is preferable to put your money into products that will help you expand your portfolio and achieve your goals of purchasing a home or starting your own business.
There are no get-rich-quick schemes
When it comes to investing, avoid being seduced by flashy schemes that are widely publicized. If it promises you double returns in a matter of weeks, it is most likely a scam. There may be investment schemes that suggest that if you pay in EMIs, you would receive bigger payments. And, over the course of a year, you’ll have earned twice as much as you started with. Not only is such a plan fraudulent, but becoming an agent of such a scheme, especially if it is a “making members” type program, might land you in legal problems. Similarly, if the stock price of a relatively obscure company rises unexpectedly on the stock market, do not succumb to your greed. Investing in such a company’s stock is a bad idea. So stay away from such scams at all costs, and make sure you don’t reveal such sensitive information with your friends and colleagues.
First and foremost, you must understand the differences between trading and investing. Investors acquire stocks and hold them for a long time, often delaying the “waiting period” for several quarters. This holding time necessitates knowledge of the company whose stocks they purchase, as well as extensive study.
Traders like to keep stocks for as little as a few hours or as long as several months, or even a year or more in rare cases.
On the other hand, investors carefully balance their investment portfolios among growth stocks, overseas stocks, securities, value stocks, and local stocks, as well as long, intermediate, and short term bonds. Depending on the sort of stocks purchased, a diverse portfolio can yield a constant return of investment of 5 percent to 12 percent. It’s also possible to lose money if you spend too much money in high-volatile, high-risk securities out of greed.
Regular investors can diversify their portfolios by investing 80 percent of their money in stock market assets and 20 percent in long-term bonds through internet trading. Over a 20-year period in online trading, bonds can provide an average yearly return of 12%. On the other hand, a cautious portfolio invests only 20% of its assets in securities and 80% in bonds.
