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Stock Market Trading Tips

Investing in the stock market can be challenging, but rewarding if you know what to do. There are some basic parameters you need to follow to avoid making detrimental decisions. Below are just a few steps that any trader should take before trading stocks.

1. Planning

“Good fortunes is what happens when opportunity meets with planning.” – Thomas Edison

Every trader should have trading plan with a solid structure that can guide them through day-to-day fluctuations in the market. With a good plan, you can mitigate your loss and stay calm if the trade gets volatile. The plan should include profit goals, methodology, as well as risk tolerance strategies. Nearly every mistake trader make is caused either by not having a plan or not following it.

2. Do Your Own Research

Investors who are looking to start trading stocks can benefit from a simple adage: do your own research. There are many different strategies stock traders can use, so you have quite a lot to research to do before making any investment decisions. At the same time, everyday investors can potentially outperform Wall Street professionals, making proper research that much more worth it.

3. Picking a Day Trading Market

All markets offer profit potential. Therefore, it often comes down to how much capital you need to get started. Don't try to master all markets at once. This will divide your attention, and it may take longer to make money. Pick one market so that you can focus your learning. Once you learn to make money in one market, it is easier to adapt to learn other markets. So, be patient.

4. Know Your Risk Tolerance

Another factor that will impact your portfolio is your risk tolerance. Even if you’re investing for the long term and want to increase your portfolio’s value over time, your personal risk tolerance may lead you to less risky investments.

Someone with a high-risk tolerance might be willing to build a portfolio composed solely of stocks if they have a long-time horizon. People who don’t feel comfortable with that risk might want to hold a mixture of stocks and bonds even if their investment goals are long-term.

5. Pay down your ‘High-Interest’ debts first

If you have any kind of high-interest paying debts like personal loans, credit card dues debts, etc. then pay them first. The interests of these loans can be even as high as your returns from the market. There is no point in wasting your energy to give all the returns you made from the market as interests of your debts. Pay down these debts before entering the market.