To become a successful stock investor / trader, you need to work hard to achieve it. Investors who buy and sell stocks based on “sentiment” or “guts” are sometimes lucky, but most are wrong. How to trade on the stock exchange to be successful?
Being right or lucky on every opportunity is not a winning stock investment strategy. The steps to be able to invest in the stock market are actually simple, but execution is difficult. Just like a football team must have a strategy in every game, an investor shouldn’t enter the stock market without any strategy.
Setting multiple financial goals and choosing a strategy
This is a cliché, but it is true. You need to know where you are going so that you know when you have reached your destination. Your goals should be focused and specific. Goals like “I want to retire in 20 years with a fortune” are not appropriate.
A good goal / goal is “I am currently 40 and want to retire at 65. At the age of 50, I will build my wealth up to 1 billion. At the age of 55, these assets become 1.5 billion. At the age of 60 it becomes 2 billion and in retirement it reaches 3 billion ”.
These numbers may not match you and have other financial goals, such as buying a home or vehicle. However, the bottom line is that you need to focus on specific financial goals with specific deadlines to be successful.
How to trade on the stock exchange to be successful requires the right strategy for you. There are three basic investment approaches, namely value investing, growth investing, and mix. You may have heard of some of the other approaches, but these three underpin everything else.
How to trade on the stock market: three fundamental investments
Value investment (Investments of value) may be the hardest, but it offers the best long-term returns. Investors using the principle valuable investment Find companies that trade at prices well below their true market value.
The company may not be liked by the stock market because it is not in the industry hot broth. Or it could be a company that is in an unattractive industry that is considered boring for investors.
This form of value investing was invented by Benjamin Graham and later popularized by the legendary president of Berkshire Hathaway, Warren Buffet.
The hardest part of this value investment is how to identify and analyze candidate companies. In value investing, a thorough analysis of the company’s finances is required to discover the true (intrinsic) value of the company. This should answer why the value is at odds with the company’s stock price on the stock exchange.
The rewards will be significant when the stock market finds the stock and raises its price from its lowest point. You bought it at the right level. This may require holding the title for a long time and updating the valuation regularly.
Investments for growth
In addition to the above investment value, how to trade on the stock exchange for next success is to apply the principles of growing investment. Growth investment (growth investments) is a section of the stock exchange. This principle involves an important aspect, which is how to find companies with strong potential for future growth.
You should avoid shooting stars that shine brightly in the stock market for a short time and then disappear. You have to look for a solid company ready to grow sustainably.
This growth investment carries greater risk if you focus too much on small cap stocks that have rapid growth potential. However, this company also has a very good chance of long-term success.
There are large-cap stocks that are in a strong growth position. Your job is to find those stocks that match your goals, strategy and risk tolerance.
More than 60% of the companies traded are large cap stocks. You have to choose it and adapt it to your financial conditions and your goals.
The way to trade on the stock exchange for the next success is to apply the principle of mixed investing or balanced investing. This investment is a combination of a value and growth investment strategy.
By combining the two and practicing proper asset allocation, stock market investors can get the best of both worlds. You can tailor your investment mix to increase or decrease the potential return and risk to fit your goal and time frame.
Personal risk tolerance is an important element in your investment strategy. If you feel comfortable losing some of your initial investment to get a higher return, it’s a good idea to invest more money than your investment in the stock market.