Share Trading Tutorial

02:25 PM - 15 Aug 11

Share Trading Mistakes - Stock Trading Mistakes To Be Avoided

Stock trading is a business where even the slightest mistake can lead to huge loss. Investors must learn common share trading mistakes to be avoided. They must learn from their own past experience, experiences of friends and family members and other market experts. Here are some tips and advice on how to avoid common stock trading mistakes: Avoid Stock Trading Mistakes Quality Vs Quantity: Buy only quality stocks. Do not run after cheap and poor quality stocks. Cut Losses: If your stock is continuously falling then book loss at 7% - 8% below your purchase price. This will protect you from further loss. Follow The Market: Yes, follow the market and try to buy at the right price. This way you increase your chances of making profit and in case the market goes against your stock, you will suffer minimum loss. Low Stock Prices: If price of a stock is low, it doesn't necessarily means that you can buy it. Do all your homework before investing. Be Practical: Don't be emotional is stock trading business. Be practical. If you have bought a stock for $ 100 and it comes down to $ 92. Sell it off and close your position. Buy it back when the market conditions are in favour of the stock. Invest for Long Term: Never invest your money in stock market for short-term. Invest for long term. Portfolio Management: Decide and create your investment portfolio. Investing without a planned portfolio is not professional. Have a diversified portfolio. Set You Goal: Set your investment goals. Decide when and why do you need the money back and invest accordingly. Monitor Top Mutual Funds: Keep an eye on top mutual funds and where they are investing money. Fund managers at mutual fund companies are highly qualified and experienced people. They do all expert study and research and study the market before investing. Spot stocks where these companies are investing and do some homework yourself and invest in those stocks. Have Patience: Never be in hurry in stock market business. This business demands patience. Do not panic. Monitor Stock Market: Monitor the stock market and current affairs in the country. Monitor top news and act accordingly. Avoid Margin Trading or Intraday Trading: Margin trading or intraday trading can be highly risky. Avoid trading. Book Profit at The Right Time: Book your profit at the right time. Never be too greedy.

12:41 AM - 15 Aug 11

Investment Portfolio Management

In my previous articles, I have already explained Have Diversified Portfolio - Why? - Portfolio Management  and Portfolio Vs Age - Portfolio and Age Relationship. Here I am going to explain few other important aspects of better investment portfolio management. Portfolio Review Assuming that you did all you homework and managed your portfolio based on your age and risk profile and you have a diversified investment portfolio. In a volatile world of share trading and investments, this is not a guarantee of making money or success. Now you have to be more professional in managing your portfolio to decrease or even eliminate risks. For this, you need to periodically check and review your portfolio and make some changes depending upon the market conditions and other internal and external factors. When to review your portfolio depends on the type and amount of securities held in the portfolio. Remember, it is your hard earned money and you just cannot lose it. It is expert advice to constantly monitor your portfolio and make adjustments as the situation demands. In a volatile market you have no option but to closely monitor and act swiftly and intelligently. How To Make Adjustments in Portfolio Portfolio Management Making adjustments doesn’t mean you need to hurry and buy or sell shares. Here are few expert tips and suggestion to help you. If a stock that you bought earlier had given you your consistent expected results but the price is not going up for some time, don’t rush to sell it off and close your position. Hold the stock. Have patience. The stock will improve when the current unfavorable conditions are gone. Never sell stocks thinking that you can buy it back when the prices are right. When you do this, you have to pay commission or brokerage to your broker for selling and again for buying. Also you may not be able to decide when to buy back the stock. Have a diversified portfolio. Invest in different sectors and in different stocks depending upon your fund and risk profile. As experts say – Never put all your eggs in one basket. Diversify your investment to decrease risk. Rotate your investment across different sectors. If a particular sector had done well in a session, it doesn’t means it will do better again in the next session. There is no guarantee. Think like a professional investor and not like a trader. Look at sectors where there is less of Extreme Volatility. These are the sectors to target. Book profit from fully valued stocks and reinvest in current and future good “BUY” stocks. You can also consider targeting stocks that are temporarily down for some temporary reasons. Measure The Performance of Your Portfolio Monitor and measure the performance of your portfolio twice a month. Compare performance of individual stocks with overall performance of the market. If you have done all your study and research, you can ignore swing of the stock market. Resources & References: DIY Investment StrategiesHow to Select Best Stocks to Buy  Price-To-Earnings Ratio (P/E Ratio) Fundamental Analysis of a Company  Using Value, Growth, Income & GARP for Stock Analysis Share Market Panic - What to Do? Buy, Sell or Hold?  Quality of Stocks Vs Quantity of Stocks  How Many Stocks to Buy - Portfolio Management Understanding Stock Market How To Understand Direction of Stock Market Should I Buy Volatile Stocks Stock Market Trend & Signal - How to Understand When & What to Buy? When to Sell?What is The Right Time and Price to Buy Stocks How to Buy Stocks at Bargain Price  When to Buy or Sell Stocks 

04:55 PM - 14 Aug 11

Portfolio Vs Age - Portfolio and Age Relationship

The age of a person determines what would be the best investment portfolio for his or her future. Whether to invests more in equities and less in fixed income or less in equities and more in fixed income depends on the age of the person. As a simple rule, the less the age the more risk a person can take because he or she has more years to earn money. Portfolio Vs Age The more the age, the less risk a person must take. So, portfolio management depends on age and risk profile. However, one must remember that fixed income cannot compete with ever-rising inflation. It is equities that can compete with the increasing inflation and hence everyone must have some equity in his or her portfolio. Also it is important to diversify fixed income investment to different tools like government bonds, fixed deposits and debentures etc. Below table will explain how to manage portfolio based on age: Age Portfolio Above 60 40% in Stocks and Mutual Funds 10% in Cash 50% in Fixed Income 50 to 60 50% in Stocks and Mutual Funds 10% in Cash 40% in Fixed Income 40 to 50 60% in Stocks and Mutual Funds 10% in Cash  30% in Fixed Income 30 to 40 70% in Stocks and Mutual Funds 10% in Cash 20% in Fixed Income Below 30 80% in Stocks and Mutual Funds 10% in Cash 10% in Fixed Income Resources & References: What is the Best Asset Allocation for my Age Your Portfolio at Age 30 Do You Have an Age-Appropriate Portfolio Asset Allocation Calculator

11:25 PM - 12 Aug 11

Have Diversified Portfolio - Why? - Portfolio Management

It is very important to have a diversified portfolio to minimize risks and protect your investment. Diversification of investment in different investment tools shields you from market fluctuation and potential risks. Investment in Stock Market When investing in stock market, it is important to buy shares of different stocks from different sectors. Even the best stocks possess some risk and there is always a chance of loss. Apart from investing in high-risk high-gain shares, it is important to invest in some defensive stocks to protect your hard earned money from potential losses. Risk-Free Investment Investors must also invest some portion of their saving in government bonds and Bank Fixed Deposits to safeguard their investments as these tools possess very less to no risk. These investment tools also offer fixed income. Portfolio management is all about managing investment so that the invested money grows with minimum risk. The best strategy to portfolio management would be to select the best performing sectors and then pick the best performing stocks within these sectors and then invest your money. Apart from stock market, people should also invest some portion of their saving in money market fund and in fixed income tools. Portfolio Management Resources & References: Fund Management Investment Management