Top 5 Tips to Win the Stock Market Trading Game Online
The stock market might be a daunting place, especially if you are new to it. The truth, however, is that the stock market is a game of strategy and not of luck. Strategizing would give you a lot of returns. Here are 5 tips to play online stock market game:
1.Diversification: Different stocks respond to the economy in different ways. For example, utility companies do better when the economy is towards a downfall. Retailers do better when the graph of the economy is reversed.
Diversification means investing across different stocks. When you have diverse stocks or mutual funds, no matter which direction the economy bends, at least a few of your stocks would render profits. This would keep your overall wealth intact. This is an important tip to keep in mind before you play stock trading game.
2.Buying and selling stocks: You need to be very careful when buying or selling stocks. Most of the time it is seen that people buy stocks and even when the price falls down by 40%, they keep that stock waiting for the prices to rise again to avert losses. On the other hand, when the price of their purchased share rises by as low as 10%, they sell it to make easy profits. In a nutshell, they are keeping the loss-making share and selling the profit-generating one. Doing the reverse will earn more profits.
3.Research on the business: To follow the advice of Warren Buffett, when buying a stock, you should research as if you were buying the whole company. This would help you predict how the stocks would perform. Checking the previous long-term records of the business will give you an idea about the company. The various ratios like P/E Ratio, Price-to-Book Value, Debt-to-Equity Ratio etc. are extremely important while playing stock market trading game.
4.Estimate ROI: Calculating the ROI before investing is extremely important when you play stock market trading game. ROI stands for ‘Return on Investment’ or the amount of money you’ll make on the invested money. This will help you decide if investing in that stock is even worth it.
This also helps you in calculating and keeping your investing fees low. Many investing sites charge buying and selling fees. You don’t want to sell your stocks too often and end up paying a huge amount here. Major investing sites have now turned to no-fee sites but you should still be aware of any hidden charges.
Before investing, you should calculate all your expenditure and the ROI and take a call if it’s worth it.
5.Don’t overreact: Learn to understand when a certain action is required while playing stock market trading game and when not. Investors often panic when there is a sharp price movement in the socks without even trying to understand what caused it. Short-lived price-fluctuations rarely affect the performance of well-chosen investments. However, if the price movement is due to a change in the business model or values and affects the long term growth, you would want to check if any action is required.
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