3 Important Factors For Easy Trading

The needs of every investor in the stock market are unique. Few invest for short-term goals focusing more on income and few invest in keeping long-term goals in mind. Owing to the risky and unpredictable feature of trading, the old and retired preferred to stay away from it. But times have changed. 

When people with no prior trading experience delve into the stock market trading, they might encounter problems understanding the technicality and operations of the trading account. It is advisable to learn from various sources how to start trading online

Here are a few points on how to trade 

Articulate strategies as per your goals

The habit of setting long-term goals reflects on the trading strategies of investors as well. Focussing on long-term returns and holding on to stocks, at times, leads to incurring huge losses. The transaction costs also add up to the losses.  After retirement, a small loss also seems to be a significant one.

You can have exposure to stock trading either directly or indirectly.  An investor can look at investing in equity, commodity, debt, and currency markets to grow wealth. Have a separate strategy for trading and investing. A common thumb rule followed is the percentage of investment in equity shares should be 100 minus age. If a person is 65 years old, the portfolio may contain up to 35 percent equity shares. This ensures balanced exposure to different stocks and reduces the chances of risks. 

Buy High and Sell High 

The basic strategy adopted by most investors is to buy at a lower price and sell at a higher price to maximize overall earnings. Most people tend to fall into the trap of buying stocks when the market is on a high. The trick to successful trading is to buy high and sell high. It is necessary to have a proper exit strategy. Trend reversal should be encountered tactfully rather than waiting for stocks to move again in our desired direction. 

Diversify your portfolio

The focus should be on diverse areas of the market rather than over-concentrating on any single sector. Unlike the working group of investors, who can risk on emerging businesses and wait for returns, retired investors should look out for mature companies with high performance that run low on debt.  

The stocks should be chosen in such a way that the liquidity requirements are met. In addition to this, stocks that grow consistently and have a good dividend payment prove to be better choices for retired investors. Companies scoring high on corporate governance and quality management are ideal options for retired investors.

A major chunk of your portfolio (let’s say 80%) should be dedicated to fulfilling your long-term goals. A minor portion, let’s say 15% of your portfolio should be kept aside for active trading and the remaining portion of your portfolio can be dedicated towards speculative gains.

Apart from these, also take care of your tax brackets and income from other sources. Eventually, a balanced combination of few strategies can bring a marked improvement in your profits.

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