In this article, we learn how beginner traders can be profitable in the money (share) market, as my previous articles tell about professional and profitable traders. Even beginners can become professionals and make money in the market. Here I share my personal experience, learnings from books and stock market.
Understanding the Money (Stock) Market for Individuals Vs Beginner Traders.
I think everyone knows about the stock market. Here I am sharing my personal experience. I am a villager. When I was a child, I saw traders coming on bicycles to buy grains (wheat, paddy, rice and pulses). They bargain with farmers and buy grains at low prices and then go to the market and sell them to small traders at market prices. They take the profits on the same day and with this type of trade their money is freed up for the next trade. Actually, at that time I did not know about the stock market, I had only seen this kind of trading.
When I was a teenager, around 2014-2015, I heard a lot of bad things about the money (Share) market. People say that the stock market is gambling, all the money lost there. In fact, they was afraid of the stock market, as if he had seen a ghost. But one of my bad habits is that when someone says it’s bad, it’s impossible, it’s too hard. I look for the reason and learn about why it happens.
After that I started reading about money market and learned why people are afraid of money market. It was found that two major events occurred in 1992 and 2008 that devastated the market. But one thing I have understood during my learning is that after some time period the stock market will revive and run upwards.
What is Money (Share) Market for Beginner Traders ?
Every professional trader start in the stock market as a beginner. When beginner traders are profitable in the money market it means that they are learning. You create your greatest experience when you continuously learn and trade the markets. Believe in yourself and your learning because the market teaches lessons like a good teacher.
When I was a beginner in the learning stage, I learned and experienced the factors related to companies for investment and stock trading.
Future Investment
Future investment means, management thinks about the global changes and upgrades them according to the changes. If they do not go with the changes, then it is not a good company. Therefore, do not go for investment.
Trading & Investing in Good Company
A good company needs two things, management and prospects. If the management is good, they take decisions as per the changing global dynamics and create better prospects for the investors and the company. Each data turn into future possibilities for a management decision.
You are willing to pay for good companies and invest in promising companies with reasonable valuations.
4 Golden Rules for Stock Selection
Everyone believes that stocks should have more risk and more profits, this is not true. Good stocks mean high returns and low risk.
1-Management
Management is the backbone of any organization. Good management chooses the best options when faced with all options and if they are very fair to the organization.
2-Business
If you understand business and also know about the future of this business. After this you can go for investment in this company. Also you should check the company whether it is a sustainable operation or not? If it has worked in the past, it will work in the future too.
3-Finance
If you are a beginner then you must check the financial statements of the company. Also see what approach they take regarding capital structure and sources of funding.
4-Fair Value
If you want to earn more profits, then choose appropriately priced stocks. Fairly priced stocks have more opportunities. I suggest that if a stock is good but valuation is very high, then you can wait and buy this stock at a fair price.
Portfolio Management
Whether you are a beginner or a professional, portfolio management is a very important part of trading. Whenever you go for portfolio management, do not choose stocks from any one sector. One should diversify their portfolio and select stocks from different sectors to manage losses.
