In today’s scenario, where the economy hides and seeks some sort of position, financial security is a must for every individual. Although it is a broad category, financial security, however, means investment and income in the future. Look at the market, and you’ll find different options for investment. Often it’s hard to pick the right option.
Trading is yet another investment opportunity that offers no limits, unlike other investment strategies, but just good returns. However, as we all know, the stock market is a constantly changing environment, and we need technical analysis to learn from it; that will ensure your market success.
Unfortunately, many of us are not going to analyze it and continue to invest. The result is obvious, and that is why people often do not respond disproportionately to stock trading.
On the other hand, many of us profit from the same market, but attitudes and strategies differ. Why is one person a successful trader and another failing trader? If you know the difference in this small line, your investment strategy is guaranteed to succeed. Before you start trading, there are many things to consider:
Financial Strength — Firstly, your financial strength — how much you want to invest — must be analyzed. You can start with small funds if you are a new trader. You can add more funds to your investment plan once you make money.
Experts in Finance — investment is not a simple task. Proper planning is, therefore, a must. If you know market trends and trading experience, you can plan without assistance. However, if you are new and would like some assistance, please consult financial experts — they are available online and offer the best investment plan.
Comprehensive Market Knowledge — A successful trader needs good market knowledge.
Online Stock Broke — Because we are unable to trade directly, your broker makes all forms of trading and charges a small fee in return. It’s like a connection between the trader and the stock market. You should therefore have a good broker who can also give you advice and let you know about the most profitable company shares.
Technical Analysis — A complete competitive market analysis is a must. You have to analyze stock price trends in the last 3 to 5 days, and you can predict market mood further. This research, however, does not always succeed; it still gives us an idea of the market.
Positive Attitude — it is not your attitude; it is your business attitude. Those who often see the market as a risky forum affect many of us and create a negative business attitude. In that very case, you can make the wrong decision, even if you are on the right track. Therefore, you must be optimistic and try to believe in yourself.
One of the main factors for successful trading is the ability to understand the market and to adapt to changing circumstances. Once you get to know the market moods, you can better reap the advantages. Invest now and build a strong future financial reserve.
How to Choose the Right Stocks to Invest In
Mia worked in a software development company for fifteen years. She’s good at her job, but she was always stressed and tired. So, she decided to give stock market investment a try in order to build a passive income portfolio that would help her retire early. She met with an old friend named Kate, a financial analyst. Kate helped her invest in high-quality and fast-growing stocks.
After two years, Mia had earned $650,000 capital appreciation profit. She quit her job and traveled around the world. She soon used part of her earnings to establish her own graphic design company. Her $650,000 grew to over $2 million.
Mia is living her dream life. She owns her time. She has a successful business, and she even bought a beach house in Miami.
Chloe was Mia’s former colleague. Like Mia, she’s been working in the software development industry for about fifteen years. She was also tired. After she heard about Mia’s success, she decided to invest in stocks, too.
Chloe didn’t know anything about the stock market and didn’t know how to choose the right stocks. She invested in companies that were buried in debt and engaged in unethical business practices. So, she ended up losing $10,000.
A lot of people get rich through stock market investment, but many people lose huge amounts of money too. This is the reason why you should be careful in choosing the right stocks to invest in. You have to be clear about your investment goals and use the right strategies that work for you and match your risk tolerance level. You must also do extensive research before you place your bet on a stock.
Setting an Investment Objective
Before you start investing, you should be clear about what your investment objectives are. You should also decide what type of investor you want to be. Do you want to be a long-term investor? Or, do you want to be a day trader, trading stocks by the minute?
You must be clear about what you want to achieve through stock market investing. How much are you willing to invest? How much do you want to earn each year? What are you willing to risk?
You need to set financial goals like how much you want to earn in one year or in five years. You should also set non-financial goals. Why? Well, your investment earnings are just mere tools that you can use to support your non- financial goals. So, what do you want to achieve? Do you want to have a grand wedding? Do you want to travel to a foreign country at least twice a year?
Factors to Consider in Choosing a Stock
The key to building a profitable investment portfolio is choosing the right stocks. When you’re starting, buying individual stocks is costlier than investing in low- cost mutual funds. Below are the factors that you should consider in choosing stocks to invest in.
Growth in Earnings
Before you invest in a company, you should check its earnings and make sure that it’s consistently growing over time. The growth doesn’t have to be huge. You just have to look for an upward trend in earnings.
For example, let’s say that you have an extra $3,000 and you want to invest it in stock. You’re looking to invest in two companies. Company A is one of the biggest steel manufacturers in the country, while Company B produces the nation’s best-selling batteries.
Sir Tim Berners-Lee published a paper about a proposed information management program called the “internet” in 1989. He then implemented the first successful communication between a Hypertext Transfer Protocol (HTTP) and a server a few months later.
In 1990, Berners-Lee began writing the World Wide Web (www) — the first-ever web browser. The next year, he launched the first-ever web page. This forever changed the world. This is what stock market players call a black swan.
According to risk analyst Nassim Nicholas Taleb, a black swan is an event that’s hard to predict that can forever change the world. And if you’re wise enough to predict or at least spot a black swan at its early stage, you’re going to win big in the stock market and in business. This explains why early internet entrepreneurs like Jack Ma and Jeff Bezos are extremely wealthy.
And soon, promising internet companies decided to go public and the investors went crazy placing their eggs in the “internet business basket.”
But after the tech industry got a little too crowded and the world experienced a stock market crash in 2008, the revenues of internet companies became volatile. So, a lot of investors ended up losing huge amounts of money.
Even so, this is just an example. It doesn’t mean that you shouldn’t invest in the tech industry. All companies are bound to lose their stock value at some point, especially during periods of recession and economic crisis.
To achieve long-term success in the stock market, you have to invest in companies that are strong and stable enough to endure unfavorable economic conditions. Erratic stock price fluctuation is not a good sign.
Learn The Right Investment Mindset By Reading Books
Mindset plays a large role in successful investing. My reading list contains many books on mindset.
A few weeks ago, I read the Rich Dad Poor Dad book and found it quite fascinating.
In Rich Dad Poor Dad, the author explores the steps to becoming financially independent and wealthy using autobiography and personal experience.
Narrative writing and framework characterize this book. Not technical insights or investment math, but anecdotes with nuggets of supposed wisdom, is the focus of this book.
The author compares his biological father’s (an intelligent, but financially inept father) lessons with the lessons his friend’s father teaches him (an uneducated, but brilliant and wealthy father).
In Kiyosaki’s life, this weaves through as he learns from the rich father and rejects the advice of the poor father (thereby eclipsing typical working-class attitudes).
However, some of the concepts in this book are questionable. Learn more about my thoughts about Rich Dad Poor Dad in my Rich Dad Poor Dad review.