Risks Associated with Stock Trading
Do’s & Don’ts of Investments
The following is a list of Do’s and Don’ts that you should go through.
It is aimed at helping you gain an insight into what one’s mental framework should be in the process of
investments. The following have been observed time and again and are also based on empirical evidence.
- Don’t try to beat the market. You simply can’t–moving sensibly with the market is good enough.
- Explore the idea: Sell when the market is rising, Buy when the market is falling. This is an important way to make the best of price movements.
- Don’t be greedy. When you are making a profit, book it and become ready to buy at lower levels.
- Be ready to engage the market. If you are not ready, that opportunity will pass.
- Don’t fear. Markets will dip and they will rise.
- Be Patient. The market may make movements that are sudden, against your analysis or beyond your expectations– in all circumstances remain patient.
- Buy good things and don’t expect bad things to outperfo rm good things. When you buy a good security, the probability of it giving you a positive return is higher than a bad security.
- Avoid deciding in a state of panic. Decisions taken while in a state of panic usually have bad results.
- Don’t over trade. Avoid trading unnecessarily.
- This is a game of averages. Success in investments is a function of averages