“wall street is the only place that people ride to in a Rolls Royce to get advice from those who take subways”
Warren Buffett
Where to get trading account ?
As we know investment is Road to building wealth, whether it be in stock market, Real estate, or Commodities. In this Article we’ll talk about investment related to stock market.
To invest in stocks, first of all things you need Demat Account. if you don’t have one I would suggest to get one on which has:-
- Low brokerage,
- Reliable in terms of frequent site crash,
- Best customer support.
I prefer using Upstox for trading in Indian market & interactive brokers for foreign investments.
Investment Strategy :
Basically in this Strategy we’ll sell shares for more than 5% – 10% profit & we’ll do it as many time as we can, and roll that profit over and over again. It easier said than done. Most crucial part is to buy at correct time or price & hedge to protect the capital. Try to Square off the position within the period 1 month.
For More in Depth details please be till the end of page.
Understanding the investment goals :
Before Jumping into stocks understand your goal, and amount you can invest into stocks. For Beginner, I’ll suggest to go small and add on as you gain experience. Invest money that you won’t require in near term in range for 5 years and that money should be surplus amount after meeting your near term goals and clearing near term debt.
Buy at correct price or Time :
“buy low sell high” but what’s low ? Actually when market is uptrends i.e it making higher high and lower high, draw trendling connecting all lower high & just when stock reverses from trendline buy at that point and sell at Resistance level or on meeting your goal. Or buy at 200SMA or at 50SMA on higher time period of daily or weekly chart.
If you want to hold if further than hedge it at that level, more of that below.
Hedge to protect your capital :
There’s many ways to hedge your portfolio, but for short term investing as above it would be best to buy PE options (buy put option). It would act as insurance.
Example:- considering you have investment capital of 1 lakh, you bought stock AAA at price of 50/share. After stock movement to price of 60/share, there’s a gain of 10%, you can either square off or buy put option at price level of 60 of amount nearing 1% of Unrealised profit. If stocks move against you, the option would compensate for the decrease in profit. At some level, you’ll need to square off both positions. If the stock moves in your direction all you’ll lose is the premium for the option.
Monitor the portfolio :
It’s necessary to monitor your portfolio to analyse the losses, learn from the mistake and increase the profit. Losses are bound to happen but what matters is in the overall term you should be in profit i.e. it’s based on number of trades. Stock prices fluctuate every second, there’s no need to panic and react for every change in prices. Consider the larger price. With this simple strategy, Beginner can invest in stocks market & learn on their way towards the investment journey.
Note: this strategy works when market is in uptrend, for How to earn when market is in downtrend I’ll update it soon.