When it comes to investing in the stock market to most people, including those who do not know this world well, a specific product comes to mind above all: stocks. And that is all, sometimes, we have heard of them, whether in movies, on the radio, in the news, etc.
And it is understood that this purchase of shares is what makes money when you invest in the Stock Market, but in reality, this step is the one that matters the least. The process to obtain benefits is much more complex and goes far beyond a simple purchase action, but many neglect it and in the end, they end up losing their investment.
Today we are going to see a few tips to avoid typical mistakes when investing in the best stocks.
Without a plan, you go blind …
Imagine the following: you have bought a number X of shares without much thought because you have been told that you are going to profit from there in the short term . But, you have questioned all these things:
1. How long will you continue to have those shares in your possession?
We recommend that, at first, you do not have them for an indefinite or very long period of time, especially if their value is not increasing. The ideal period will dance between a few days and a few weeks.
2. When are you going to sell them to get considerable money from them and how much do you intend to earn from that sale?
Do not lose your head thinking about earning very high profitability percentages, at least in the beginning. Around 8% is a very acceptable figure to start with.
3. How much can you lose? Are you willing to take that risk?
What maximum percentage of losses would you take? Put a number, a concrete figure, whatever you want, but put it. And be very clear from the beginning because later it can be very big if you are not prepared mentally and emotionally. Our advice is that you never let losses exceed 5% of your trading account . And that seems like a lot to me, if you can keep it below 2%, the better.
Each thing at it’s time
Do not be in a hurry and do not rush to buy like crazy without having studied the market situation. Wait to buy when the stock market is rising, that is the best time.
Don’t listen to the siren songs
You will hear a thousand news stories that will make you think that buying certain shares will pay off. Or someone will give you a super secret “tip” that will make you earn a lot of money investing in such a society that is on the rise. And you, you will fall … because most people fall at first. The safest thing is that you will end up losing the capital invested.
Keep in mind that financial news manipulation exists. Surely behind it there are hidden interests that will not favor you. So it is recommended that you always think for yourself, that you investigate and that you learn to do fundamental analysis to study the real state of the markets, companies, etc.
Buy the right stock amounts
If you don’t know if what you are going to spend on an investment in stocks is a lot or a little, find out!
And be very careful with the losses you may have due to the commissions that are charged to you. Because even if you make a good investment, if you invest little, surely everything (capital and profits) will go away in paying those commissions. A block of 600-1000 euros would be correct from my point of view.
Remember: cautious person, it is worth two. If you see that the price of these shares goes down a lot, give an order to undo the position to your broker. In other words, make sure you control your STOP LOSS very well , because if necessary, it will be your best friend.
What do you need to be able to buy shares?
Find yourself a stock broker.
You will need it both to buy shares and to sell them. If you don’t know what it is, a stock broker is a person (or company) who is authorized to carry out these operations on the Stock Market.
And by the way, we strongly recommend that you always look for a broker regulated by a recognized entity. It is important to support you.
Well, you have to tell this person or company what you want to buy or sell and the amount. In exchange for performing this task, the broker takes a commission (also pay attention to the commissions and choose a broker that interests you in that regard)
