Write six precaution one must take before investing in the stock market.
Answers
Answer:
What are the precautions to take before purchasing a share in the stock market?
1st You must know how stock market work, learn basic terminology (Stop loss, Bullish Entry/Exit loads,stock symbol),learn to read financial statement and meaning of important ratios (debt to euity, EPS, DPS etc.),stock charts to analyse a stock
2nd have clear cut Investment objective for every stock 1 Short term 2 Long term 3 Intra day(not for beginners)
3rd Never invest all your money in single stock and most important Never invest your saving on stock market as they are subject to risk go for safe investment like (FD,PF,POST OFFICE DEPOSIT,Insurance Policy,Mutual fund,govt bond NHAI etc)
4th Don’t ignore the expenses as you pay (Brokerage and securities transaction tax on sale/purchase, Capital gain tax in case of profits).Now select a stock broking firm as per your investment objective (eg. Zerodha is good for intra day trading as their rates are very low for intraday).
5th Good timing for eg As modi government lost votes from agri based society(Gujrat) it was quite clear before budget that agri sector will be a good target so one should have bought agri industries stock
6th Be Brave enough to sale share at loss to save more loss. On stock market you either you will earn or loose make sure you earn more than you loose.
7th Control your emotion Don’t make hasty decision based on management over optimistic speech/Irrelevant news think wisely and make logical decision
8th and last if you are investing through a broker then choose one wisely and don’t forget to read
Hope this will help..