For a new investor, stock markets can be an alluring place. While trading for the first time, it might feel like legalised gambling, where people make and lose their fortunes. But the right approach is to first have a thorough understanding of the financial market. Even with the knowledge of stock market fundamentals, however, you can make mistakes as a first-time investor. Read on to know about these common mistakes:
While trading online for the first time, you cannot afford to ignore the basics of stock markets. This means understanding the concepts like ‘Going Long’ ( first buying, then selling), ‘Going Short’ ( first selling then buying), bid price, ask price, bid quantity, offer quantity, and stock price changes. You must also understand how the following metrics are calculated before purchasing stocks:
While seasoned investors have a solid plan, first-time investors can often lose direction by unplanned investments. If you are trading online for the first time, you should have a personal investment plan, which includes the following:
If you are trading online for the first time, then you should not invest on the basis of rumours or market speculation. You must do market research, gather the data about the existing trends and patterns, and then invest. Many stockbrokers provide ample technical analysis through a minute-to-minute analysis of the stock markets. You must study the updates and charts, and make informed decisions.
First-time investors often make the mistake of selling out in a panic or holding on to a losing stock. Here, you must remember to consider whether a downward trend in the stock market is just temporary, or a long-term loss. A short-term attitude towards the market can result in a situation where you sell out your stocks in panic, without considering the fact that their prices would rise up again. Conversely, when market indicators suggest that the stock prices are headed towards permanent depreciation or a point from where they won’t pick again, you should sell the stocks, and cap your losses.
There are a slew of stockbrokers who provide similar services. In the digital age, it has become easy to trade after opening a Demat Account and a Trading Account. Investors trading online for the first time often choose a brokerage platform which does not provide an all -in- one account along with cutting-edge stock and scheme recommendations.
Thus, while trading online for the first time, you should avoid making these fundamental mistakes. You should always remember to open an online Demat Account and a trading account with a trusted financial partner who can provide an all-in-one, hassle-free trading platform. You should look for unbeatable features like brokerage cashback, free AMC period for online Demat Accounts and zero online Demat Account opening fees. Alongside, a single Demat Account for investing in various options, you should also ensure that you are receiving daily and weekly customised market reports. For maximum profit booking, select a trusted partner that provides in-depth coverage of markets, companies and business with heat maps.