- by Arunima SenGupta
- 21st Aug 2020
Top 7 Tips To Play The Stock Trading Game
The stock trading game and people involved in it faced a major backlash after the stock market crashed owing to the ongoing COVID-19 pandemic.
A major trick to being a winner at the stock trade game is to not indulge in herd mentality. Following the masses blindly in the stock market investing can do more harm than good and result in losses.
Stock trading requires you to be mature and logical in your decisions. Also keeping emotions away from this arena is always advised. To not give up even in the midst of a financial turmoil is important to have a long sustained stint in the stock market. Risks in the stock market should be well thought of and calculated, impulsiveness in the stock trading game is a big no.
The first and foremost point that should be kept in mind is to place more importance on the quality of business rather than just keeping a tab on the stocks. Look at the bigger picture. Taking into consideration the entire company rather than just the few shares you are going to buy will take you far in this game.
The second tip is to ask yourself if you are going to own the stock for as long as ten years if you buy it. Setting small duration goals does not prove to be a lot of help in the stock trading game. You have to think long term.
The third thing to keep in mind is to check through umpteen stocks and invest only when you receive the highest bargains. Look for undervalued companies to invest in. If the current price is less than the intrinsic value, the company stands undervalued.
Look through the usage of the resources by the management of the company. If the company manages its money, employees and material well, it will be reflected in Return on Equity and Return on Capital.
Hot stocks should not be chased. Instead you should choose a stock that has been consistent in its performance and is going to perform well in the long run. You should choose undervalued stocks that have the potential to perform well and not run after popularity.
Calculate the amount of money you can possibly make by investing in the particular stock. Estimating the return from a stock before investing in it is an extremely important strategy.
Get rid of stocks that are not performing well. Going on investing in them is of no use. Always hold onto the winning stocks and leave out the stocks that are not bringing out good returns.
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