Tips to earn profits from investing in share market

Trading attracts many people to make earn money quickly. Trading consists of discipline, awareness and smartness. Below mentioned are tips through which one can earn profits in the share market.

Profits are all about risk management. Execution is important to many share market tips. Discipline in share trading is so important that it cannot be overstressed. That is because when people are earning, they become greedy. When prices are low, the fear makes them sell shares faster. These situations can be avoided if they know when to book profit/loss.

If losses are not usual and the market’s roller-coaster movements are in a higher position, these are a few habits and skills that is helpful for you to stay on the right track. This is of great use for day traders as well as positional traders.

1. Stop Loss: The ladder to success is by stopping loss. It is helpful for a trader to sell a stock when it slides to a certain price. For example, if you purchase shares of company X at Rs 10 and set a stop loss at Rs 7. When the price falls to Rs 7, the shares will be sold on their own. This means that your losses have been limited to Rs 3. When you enter a trade, you should be clear about how much loss you are willing to bear.

2. Timing to enter and exit the market: Trading is a skill which one should learn as it tells us what not to do along with what one should do. It lets you know when to get in and when to get out. Many investors in the stock market do not know when to buy. The quality of a skilled trader is that he identifies such people and takes an opposite position to trap them. One should identify a few stocks and focus on them by having a definite plan.

3. Do not invest from your core savings: Only those with a minimum capital of Rs. 2 lakh can trade for a gain which is meaningful. However, you cannot borrow this capital and should not be part of your core savings. So, there is a need for a certain minimum capital. There are enough stock volumes for it to be easily tradable.

4. Trade in shares with a minimum price range of Rs. 10: You should undertake shares with a minimum price range of Rs 10. This means that the average difference between a stock’s intra-day high and intra-day low should be a minimum amount of Rs 10.

  1. Suitable trade timings: One must look for the most suitable market timings. The best time to trade in the Indian stock markets is between 9:30 A.M. -11.30 A.M.
  2. Trade in stocks which have a beta of above 1: Any stock is good which has a positive beta of 1 or above. A beta of 1 signifies that the stock will be moving in line with the market. If there is a fall in the market by 2%, the stock will also fall 2%. One can look at a maximum beta of 2 or 2.5, not more than that.
  3. Supply and demand for shares: The supply and demand of individual stocks in the share market should be known by everyone. To know if the quantity sold is more or the quantity bought is more, one cannot rely on numbers available on the screen. Only an analysis can help identify the supply and demand in individual stocks.

Never trade on the news which is prevailing in the market. It takes a few minutes to adjust to any news. It is also never suggested to average out. Always wait for the right and most appropriate time.

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