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Friday, 4 December 2015

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Salient Features of Stock Trading

The reason for failure of most of the traders in the StockMarket is that most of the traders start trading with minimum knowledge about the Stock Market. Thus improper tactics and techniques, stemming out of low knowledge about the stock market, result in the failure of the traders. The best way is to first study and to take proper knowledge about the Stock Market and then only start investing real money in the market.
There are different ways of trading in the Stock market. Some people opt for Intraday Trading and others opt for Short Term trading. The main ways in which the trading can be done in the Stock Market is the Intraday Trading, the short term trading and the long term trading. The risk factor is highest in the Intraday trading, then the short term trading and least in the Long Term trading style. For long term trading the fundamental analysis is used and for short term and intraday trading the Technical analysis is used. In case of a long term trading style the period of investment usually ranges in years. The risk profile is Minimum in case of a long term trading if the investment is done in good companies. One of the ways to find good companies is to invest in companies which offer regular dividends. The companies which offer regular dividends are usually fundamentally strong and have good cash inflow. These companies are usually the better options for investment than the companies which don’t offer regular dividends.

The diversification of the portfolio is considered as the best way to minimize the risks involved in the long term investment. The diversified portfolio prevents the investor from incurring heavy loss when there is a downfall in a particular sector. The investor should choose 3 to 4 sectors which are the major one and invest in one or two stocks in all of them. 

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