5 Don’ts Of Stock Market Trading
INVESTOPAPER
The stock market always carries a fair share of drama and uncertainty that makes it more interesting to the investors. No matter what the market sentiments are, you can always look for opportunities to cash in your money. The market provides chances for you to buy good stocks at a bargain price. Similarly, you can offload the overpriced stocks in a bullish market. There are different strategies to excel in the stock market. You need to follow the basic things and avoid many to be a successful investor.
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This article is a beginners guide in the Nepalese Share market. Here, we will talk about what you need to avoid while making investment decisions in Nepalese stock market.
Don’t Make Rash Decisions
Most of the new investors are motivated to invest in the share market of Nepal to make instant profits. If you enter into the share market with this intent in your head, be prepared to face the worse side of the market. Never ever invest in shares of any companies blindly without gathering general knowledge and idea of the company. If you love fairy tale, then stay away from the stock market because the market doesn’t go that way.
Don’t Pay Attention To Noise And False Rumors
Stock market is a place where many speculate and make decisions accordingly. So, taking your decision rashly on rumors can hurt your portfolio return. There goes a famous saying – ” It is better you catch your ear before running after the crow when one says that the crow has taken your ear.” First of all, make sure that the news and information that you are receiving from is a valid source. There are lots of noise in the stock market so make sure to filter them.
Don’t Invest By Borrowing At Higher Rate
You need to control your emotions in the stock market. Entering into the stock market is easy, but getting out of it is harder. For instance, pouring money in the bullish market is very easy because your decision gets justified the next day or the next moment. The excitement keeps on growing and you get dragged to invest more and more. But once the market changes its color, it would be hard to stick to your portfolio when you are unaware about its long term possibilities. The scenario becomes worse when you have to pay high interest on your borrowings and also bear the loss in the stock simultaneously. So, make sure to avoid borrowings at a higher rate which place the extra burden to stick to the portfolio during bearish times.
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Don’t Over-diversify Your Portfolio
We have always heard that it is not sensible to place all eggs in a single basket. Diversification helps to reduce risk by covering the loss from one or more sectors. Stock diversification is always good but over-diversification can ruin your portfolio return. So, putting more stocks in your portfolio must be avoided.
Don’t Over-trade
Over trading is not considered as a good strategy to profit in the stock market. You have to give time to your stock portfolio to significantly increase your net worth in a longer time frame. When the stock market is unstable, being a watchdog can be a good strategy. Getting yourself involved in buying and selling stocks frequently can be an addiction. So, it is advisable to avoid frequent stock trading.
Bonus: Don’t Fully Rely On Market Timing Strategy
The market timing is the strategy to make decisions of buying and selling stocks by predicting the future market price movements. It is very risky to make investment decisions purely based on market timing. You should look at the stock rather than its price movement while buying or selling the shares of a company.
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