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Secrets of Stock Trading for Absolute Beginners

August 31st, 2011 · No Comments · Learn Stock Trading

Trading has become one of the most lucrative stock market activities. Many people are enticed by it as they believe they can make a good amount of money in a very short time. Besides that, brokers also offer lucrative brokerage on stock trading. But all this completely ignores the danger inherent in stock trading. You can end up losing your money in trading as stock markets can be volatile in the short run. Many people have committed suicide after they found out they were unable to repay their debts, when the markets crashed.

Hence here are some tips that you can use for trading safely.

? Trade only in blue-chip shares. These shares tend to appreciate fast during the market rally and fall the least during the market crash. Moreover if you find you need money, you can always sell them and recover your money.
? Keep a strict stop loss. Stop loss is the price over which you will not buy and below which you will not sell. This is very good in safeguarding your loss when the market crashes. Always sell once you reach your stop loss
? Don’t let greed and fear overtake you. Greed and fear have been investor’s worst bane. Many people have lost their money due to this.
? Don’t look at trading as your only source of income. Many people tend to look at stock trading as their only source of income. Don’t do that, as during the market crash you will be left with no income also you will find it difficult to meet your expenses.
? Keep sufficient balance in your trading account; since unlike stock investment, you need to move quickly in order to benefit from market fluctuations. In case of delay, you will end up losing a good profit.
? Take care of your tax liability. If you are a tax payer, the gains you make from stock trading will increase your capital gains tax. This means you will end up paying more tax, as capital gains will be added to your income. (Find out about UFX Bank Forex Trading. Also make sure to visit Share Trading.)
? Learn to deal with profits and losses with equanimity. Remember you don’t win all the time. There will be some losses along the way. You should learn to bear them with a smile.
? Learn to interpret the charts correctly. These charts show the price movement of a particular stock over a certain period of time. This will give you an idea how the stock price will move.
? Choose the broker who can give you a good amount of margin. Margin is the amount of money you can use to buy shares without having to pay for anything from your pocket. E.g. if you have Rs. 10,000 in your trading account, your broker can give you a margin of Rs. 40,000. This means you can buy shares worth up to Rs. 40,000 without the sum being present in your account. Different brokers give you different margin money. Select the one who gives you the best margin money.

This are some tips that will let you trade more safely.

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