Golden rules of stock market trading

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Here are Golden rules for Stock market trading – The 4 most important rules in stock market trading

As a newcomer to the stock market, you will be confronted with innumerable investment opportunities in the financial media. And if you do not get enough or misinformed here, you run the risk of making catastrophic investment decisions in stock market trading.

Stock market tips for beginners: The 4 most important stock market rules

Rule 1 – Important Stock Exchange Rule: Do not invest money on the stock market that you need to live or borrow somewhere.

This rule needs no further explanation, please follow. Because stock market investments not only offer attractive return opportunities, but are also subject to risk of losses due to price fluctuations.

Therefore, you should only invest money that you have saved and you can do without the need.

Rule 2 – Important Stock Exchange Rule: Put on multiple stocks to spread the risk!

In technical language, this is called diversification or risk diversification. As a result, the development of your own portfolio is not just dependent on 1 or 2 shares.

TIP 1: A good spread of risk can be achieved in my opinion with at least 10 different stocks in the portfolio Alternatively or additionally, an investment in index funds (ETFs) , where simple indexes are usually simply replicated, can also automatically provide optimum diversification.

TIP 2: To further reduce the overall risk of your own investment, it makes sense not to invest your accumulated money exclusively in equities. Instead, one should consider not only stocks but also other asset classes (such as bonds, overnight money, gold and real estate). The more money you have available for investment, the more important an investment distribution (known in technical terms as “asset allocation”). At the very least, you should have a certain amount on a call money account to be flexible at all times (for example, for larger expenses that hit you suddenly).

Rule 3 – Important Stock Exchange Rule: Long-Term Investing Instead of Short-Term!

Many newcomers suffer losses on the trading floor because they want to earn a lot of money there quickly. But: The development of stock prices is unpredictable, especially in the short term. Even experienced professionals often find it difficult to be successful with short-term investments. In addition, the risk of loss is compounded by the many dangerous derivative financial assets that are tempted to act in the short term and are also heavily advertised on the Internet.

These include, for example, CFDs, forex trading, binary options and leverage certificates. Because of leverage, you can lose money even faster with these derivatives. If you put money in here as a beginner, then there is the acute danger that the dream of rapid stock market wealth will quickly become a lossy nightmare.

Therefore, I strongly advise you to suppress the greed for profit and invest money in the long term (at least 10 years or better even longer, which is also recommended by many investment experts). After all, if you have patience and a long-term investment horizon, you have far greater chances of really making money on the stock market.

Why? All you have to do is look at the DAX chart of the last 40 years (click here) . This reveals that the DAX has almost doubled during this time. In between, although there were more or less strong setbacks (dot com bubble, financial crisis, etc.), but the courses have repeatedly recovered and beyond broken new records.

Rule 4 – Important stock exchange rule: learn basic stock market knowledge.

Basically, you’re already following this rule because you’re reading this article ;). But stay tuned, with the help of my stock market fundamentals! The rule is: the more active you invest (stock companies analyze, etc.) and the higher the risks, the deeper knowledge you should have.

Significantly less stock knowledge is needed, for example, in the already mentioned passive ETF investments.

There is a stock investment really impressive easy for beginners who want to invest reasonably and with the least possible effort on the stock market.

There are so many stock market institutes in India from where you can learn basics of stock market.

(Contributed by an Expert in Stock Market Trading)

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Harpreet S

Harpreet is a senior Technocrat from Industry with penchant for blogging, product reviews. Apart from Technology, he covers sectors like Lifestyle, Luxury, Travel, Automobile, Fashion, Healthcare, Real Estate, Hospitality, Education and much more