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Top 10 Tips for Share Market Trading Success

Share market trading is considered a lucrative way to make good money, sometimes passively (see: passive income). However, making money in share markets is easier said than done, as market volatility puts investors and traders in a dilemma of whether to buy, sell, or hold under certain market conditions. 

As markets follow variable patterns and situations, there is no one key to success. But there surely are some best practices that have been proven to yield favorable results. The following tips could increase your chances of successful online share trading and maximize your returns.

Top 10 Tips for Successful Share Market Trading

The ten tips are as follows: 

1. Stay clear of the “herd mentality”

Most investors who begin their trading journey get into the yoke of “herd mentality”, influenced by their family, friends, and the like. They invest in particular stocks by following the herd mentality. However, in standard market parlance, this strategy has been seen to backfire over the long term. So, do not follow the herd mentality.  

2. Have a trading plan

As a trader, you should have a trading plan setting out your stock’s entry, exit, and investment basis. You can also test your trade plan on an online trading platform before investing your money in the market.

3. Undertake fundamental and technical analysis

Thorough market research is necessary before you plan to invest in any stocks to form sound investment decisions. You should do fundamental and technical analysis of a company’s stock and not just trade or invest based on the company’s brand name. 

The volatile nature of the market should also be considered before investing in any stocks. You should not let emotions or personal sentiments rule your trading decisions.

4. Do not time the stock market

Timing the stock market is not a good strategy as even expert traders cannot do that continuously. No one can accurately evaluate the top and bottom positions of a stock. Hence, invest in a stock with a long time horizon to get the best results.

5. Do not follow market tips blindly

Stock market tips received are not the law, so you should not invest based solely on tips received, including this one you’re reading. You could ruin your chances of making good returns if you blindly follow online tips and tricks. When you receive such tips, conduct your own research to evaluate whether you should invest according to the tip given or not. Your financial advisor can also help you and suggest which tips to follow. 

6. Diversify portfolio

Diversify your stock portfolio across different asset categories and classes. It will help you maximise your returns over time and mitigate investment risks.

7. Follow a business-oriented approach

Invest in stocks of companies of which you have the business knowledge and have done in-depth analysis. It will help you get the stock fundamentals right and help you make sound investment decisions.

8. Be techno-savvy

Today, technology is the key to hassle-free and efficient investing. So, update yourself with technology in trading to apply it to analyse stocks, conduct market research, and invest.

9. Take needed risks

Some risk appetite is needed for making good profits. However, do not overexpose yourself to sharing market risks.

10. Plan for a stop-loss

A “stop-loss” implies the predetermined risk level a trader takes while trading and could be in absolute numbers or percentages. A stop-loss strategy is needed owing to the changing market conditions’ impact on the stock price.

To Summarise

Share market trading, though lucrative, entails long-term vision, discipline, and commitment. So, understanding which tips will benefit your trading journey is essential to maximise your returns.  

Disclaimer: This blog is not to be construed as investment advice. Trading and investing in the securities market carries risk. Please do your due diligence or consult a trained financial professional before investing.