Any task that a person undertakes is called work. A work for monetary benefits is called economic work. Economic work creates financial returns within stipulated durations of time such as a day, a weak and a month. The daily earning through knowledge-driven skills is delicate and thin area of economic life. However, with the advent of the internet, an entirely new home-based / self-employment opportunity has surfaced. It is Stock Trading. This business has the potential to generate reasonable income every day. However, the opportunity has a risky downside; the possibility to lose money is as great as it is to make it especially for novice / inexperienced.
Stock Market is utilized in multiple ways depending on how much risk a trader is willing to incur. Traders usually focus on daily, weekly, monthly and long-term earning. To maximize the financial benefits, you need to decide what kind of stock trader you want to become. The right fit depends on personality, time availability, financial prudence and capital investment. Almost all types of stock trading are potentially profitable.
Successful Share Trading depends on the conceptual ability of trader to predict accurately prices and practical ingenuity to manage efficiently risks. Two techniques are commonly used to forecast prices - Fundamental Analysis & Technical Analysis. Technical Analysis forecasts the direction of share prices through the study of past market data of price and volume. On the other hand, Fundamental Analysis determines the intrinsic or true value of the shares. If the intrinsic value is higher than the market price it is recommended to buy the share, if it is equal to the market price hold the share and if it is less than the market price sell the shares. The fundamental analysis consists of four types of analyses, that is, Economic Analysis, Industry Analysis, Company Analysis, & CEO/Top Management Analysis. A day Trader can use these different but to some extent complementary methods for stock trading. For example, a fundamental investor may use technical arguments for deciding entry and exit points, while, a technical investor can use fundamentals to limit their universe of possible stock to 'Well Performing' companies.
The keys to earning as a stock day trader are two, first, to gain as much knowledge about the relevant industry as possible and, second, to maintain rational expectations during wavering situations. Specialization in some specific type of stocks is plus point for profitable day trading.
Remember, majority of day traders go for short gains, buy in early and sell out the same day. Holding overnight is too much risky, especially for capital-starved traders in unstable market conditions. The golden rule of stock trading is, 'never risk more than you can afford to lose.''
Precisely speaking, you should be flexible (not volatile) towards different types of strategies in your market system and your investment approach, so that you can adjust to the market, be it bearish, bullish or even range bound. Although, the future remains unknown, investors who come with good research, use independent thinking rather than naively follow the crowd, have the mental fortitude to stick to their targets and sell once target returns have been achieved, are likely to realize superior returns on their equity investment portfolios.
Muhammad Ilyas Qadri
CEO
Silverline Management Consultants & Software Engineers (SMCSE)
CEO
Silverline Management Consultants & Software Engineers (SMCSE)
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