Without further ado, let's consider a bunch of principles of investing in stock, which will put the odds of succeeding in this business in your favor:
The trend is your friend. This means that you should avoid trading or investing against the existing trend.
Don't buy at the top, especially when the stock keeps on setting new all-time highs. This is the situation when investors start taking profit and cashing out, which leads to correction in the best-case scenario.
Buy cheap. A period after a sharp drop is s good time to start buy at a discount. However, in this case, it's important to figure out a decent entry point.
Don\t try to catch a falling knife. Many investors out there buy when the asset starts losing value really fast. While this may indeed be a great moneymaking opportunity, when the market is driven by emotions, it's often hard to estimate the degree of this market drawdown. This means that you can still start buying too high.
Set up stop-loss orders. Before entering another trade, you should consider your max risk amount beforehand. This amount obviously depends on your risk tolerance as well as your market analysis. As a rule of thumb, your stop loss should be set at the level wheter it becomes obvious for you that your market expectations have failed. This will allow you to avoid painful losses driven by emotions.
Pay attention to the stock's liquidity. If you consider selling the stock at any time, then you should consider investing in fairly liquid assets. Liquidity means there is a big amount of buyers and sellers in the market. Apparently, the so-called blue chips (index WIG20) are to most liquid assets.
Take advantage of learning how to trade and invest professionally with Masterforex-V Academy. After you have gotten your feet wet in trading and investing, you should consider expanding your knowledge and expertise by learning from professionals.
