Best Stock Market Strategy For Beginners
There can be multiple parameters for choosing a trading strategy for anyone, whether beginners or experts. But in this article, we are going to talk mainly about beginners.
Multiple parameters for choosing a strategy for earning revenue from the stock market include risk appetite, goals, time horizon, etc. So, depending on your risk appetite, your investment strategy will change.
Talking about goals can be short-term goals, middle-term goals, or it can be long-term goals.
For beginners, it is advised that you first take a stock market course to learn about the stock market before investing your money. The stock market is highly volatile, so it’s better to first learn than invest. Now let’s see some stock market strategies for beginner traders.
Stock Market Strategies For Beginners
1. Know Your Self
Firstly, know precisely who you are and then make your strategy.
(i) Age: See in which age category you are. If you are young and earning, you can take a higher risk than a person in their mid-50s or 60s. Younger people can have an active income. Because younger people can earn as per their capacity, but older people don’t have much capacity to earn at their age. Most older people don’t have active income.
(ii) Time Horizon: As I already mentioned above, your strategy also depends on your time horizon. If you are investing in your child’s marriage and your child is now a teenager, it means you have more time to save money. So, your long-term or short-term investment plans decide your investment strategy.
(iii) Dependent People: This point is also important to choose an investment strategy. If you have a small number of dependent people or no people who are dependent on you, then, in this case, you will have a higher risk-taking capacity than people who have more people dependent on a single person.
That person with more people dependent on them will have a significantly lower risk-taking capacity to fulfill the needs of the dependent people on them.
(iv) Income: Look for the income you receive. Is your income fixed and stable or not fixed and unstable?
If your income is fixed and stable, you have a higher risk-taking capacity than the person with an unfixed and unstable income.
An unstable income person will have a significantly lower risk-taking capacity as they have no stable income to invest and take the risk for it.
So, in all these points, you will see who you are and what is your risk-taking capacity. Based on this, you can choose your investment strategy.
2. Investing Your Money
When investing your money, you should always keep in mind that the money you are investing will not be used in three to four years.
If the money is not in use for at least three to four years, then it’s a good idea to invest in good stocks and get good returns. Because if ever you lose your money in the stock market because of a fall in the value of your stock, then it will not affect your financial stability as you don’t need that money for at least now.
Before getting into something new, it’s always a good idea to take knowledge completely about it before taking further steps into it.
Mainly, gaining knowledge holds significance when investing your hard-earned money into the stock market. So, know everything before you step forward. You can join courses suitable for your understanding of the stock market.
4. Buy And Hold Strategy
The buy and Hold strategy is easy to understand. As its name suggests, buying and holding the stocks. Don’t just get confused by the fluctuations of the stock market.
Hold the stock for at least three to five years. Keep your eye on the development of the company of which stock you own. This strategy will keep your ownership in the company for the long term; it means you have long-term plans for your investment.
You can give your time to work and other things, so there is no need to focus on market fluctuations. This strategy can many times give you a good profit. But there’s always a risk of losing your money. Keep this in your mind every time before you invest your money in the stock market.
5. Knowing The Company
At this point, knowing the company is about taking full knowledge about the company of which stocks you want to buy. A company’s development and growth depend on factors such as past work, present performance, customer services, performance and planning for the future, etc. You should know about the company before investing your money in it.
Always think twice before investing in the stock market. Think about where and why you are investing your money. Beginners generally start trading in the stock market without any knowledge and end up losing a lot of money. So it is highly recommended that you should first learn and then invest.