Saturday, 21 November 2015

Truth or Myth of Stock Market

Truth or Myth of Stock Market
A lot of people are attracted towards the stock market as a possible avenue to make good wealth. But the reality is that many people end up making loss in the stock market. The reason for most of the people are unsuccessful in the stock market is that there is a high probability risk involved in the stock market. There are equal chances of profit and loss in the stock market. Thus if the trader approach the stock market with a good strategy it will lead to overall profit to the trader. It is the experience of all that no strategy can be 100 percent correct. It is almost impossible to predict the stock market with 100 percent accuracy. The strategy which gives 60-70 percent correct calls can be considered as a good strategy.

There are options against the traders that they can trade in the intraday fashion, short term trading or long term trading. The risk factor is Maximum in case of intraday trading and is minimum in case of long term trading. The profits are however more in case of intraday trading and short term trading than the Long term trading. The risk factor in case of long term trading can be further minimized using the diversification in the portfolio. A diversified portfolio is much more risk free than investment done in the single stock. The reason for it is that in diversified portfolio there are stocks from all the sectors which ensure a consistent profit. Thus if there is a situation in which the stock of a particular sector falls the loss in the stock can be covered by the profit in the stocks of other sectors.

The investment in the stocks which offer the dividends is the way to find the good companies to invest in. The companies which give dividends are considered to be the best one and having good fundamentals. The dividend will also add as a passive income source. The investor can use the dividend re-investment scheme to get further benefits. In this scheme the dividend is used to further buy the shares. Thus it will lead to a cumulative increase in the wealth of the trader.

The trader can take the advice of the reputed advisory firm to trade effectively in the stock market. Money Classic Research is one such advisory firm which provides accurate stock market tips in the form of buy and sells calls with proper stop loss.

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