You already know this, but not everyone buys and sells stocks is already a stock trader. We can classify investors into two based on the frequency of their transactions as well as the driving actions in their strategy. They are either traders or investors.
Stock trading refers to a person who continuously buys and sells stocks in a frequent manner to capitalise on daily price fluctuations. They’re hoping to get returns soon compared to buying shares in a blue-chip company to pass along future generations.
How to survive stock trading
Understand the type of trading that matches your preferences
Active trading. This is when an investor places 10 or more trades per month does. Strategy used conventionally rely on timing the market as well as trying to take advantage of short-term events at the company level or from market fluctuationsto get a profit in the coming weeks or months.
Day trading. This is a strategy used by investors who fast and furious with stocks — they buy, selland close their positions of stock in a single trading day, which means they don’t put much attention about the inner workings of the underlying businesses. Day traders aim to make returns in the next few minutes, hours or days according to the daily price fluctuations.
Passive investing. This is the game of long-term investors. Their intent is very different since they focus on buying and selling stocks passively and they also tend not to transact often. Instead of using analysis ortiming the market, passive investors use fundamental analysis to assess businesses behind the ticker symbols and then acquire shares with the hope that they’ll be rewarded over years or even decades via share price appreciation and dividends.
Practice for success. This doesn’t need to be with real money. You can utilise apps for hands-on, low-pressure experience, Virtual trading tools are usually offered by online stock brokers to help beginners whose primary concern is how to invest in stock market in the Philippines. Paper trading allows you to assess your trading skills and build up a track record before using real money on the line.
Utilise no more than 10% of your portfolio when trading. While you may have the talent and skills for stock investment, using more than 10% of your portfolio to individual stocks can cause much volatility. Invest only the amount of money you can afford to lose and never use money that’s reserved for must-pay expenses like a down payment on a house or carand ratchet down that 10% if you don’t have a healthy emergency fund and 10% of your income earmarked into your retirement savings account.
Choose a good trading partner. You need a broker to start trading stocks, but research well before committing to any broker. Choose one with the right terms and tools that best fit with your investing experience and preferences.
Investors who are new to trading should find a broker that can teach them the tools of the trade and how to invest in stock market in the Philippines if they choose it as their primary trading location. Tools include educational articles, online tutorials as well as in-person seminars. Other features to consider are the availability and the quality of screening and stock analysis tools, on-the-go alerts, easy order entry and customer service.
The time you spent understanding the fundamentals of how to research stocks and experiencing the ups and downs of stock trading are time well spent that will tremendously help you later, as long as you enjoy the ride and not use any money you can’t lose on the line.If ever you fall on the bad side of stock investment, these tips should help you safely trade.