5 Tips to invest in equities — Part 2
5 Tips for beginners to invest in equities — Part 2
Back again with another of our tips to invest in equity. Many new investors are struggling to understand the way in which investing works. There are too many products, too many tools, too many concepts, and too many of everything. In this article, you will learn general tips before you start investing.
Without further ado, let’s jump right in!
1. Limit order
A limit order is one helpful tool for traders, be they new or seasoned. A limit order is where you put an order to either buy or sell when a particular equity reaches to a certain price.
For example, A sees that XYZ stock is currently going up, but just like any other stock — there are a lot of ups and downs in a very short period of time. Thus, what A can do is he can place an order to buy XYZ stock at a price where the graph goes down for a little while, say, at $1.
So, if the price ever goes down to $1 then the order will be filled. It’s an easier alternative than constantly staring at the graph, especially for those who are not full-time investors.
The concept of a sell order is also the same, whereby if the price goes to a certain limit that you set, then the stock will be sold at the amount you decided.
This tool, apart from taking the pain out of your head, is useful in avoiding you to overpay for a certain stock that you have been aiming for and avoiding selling stocks that you have for much less than what you desired.
Sometimes the price window was too swift that a non-automated process will most likely miss it, it’s good to have a helping hand.
2. Be in the know
Many new investors think that you must constantly monitor the graph of the company you’re investing in without actually knowing that you must also monitor the things that actually affect the graph.
Usually, any news update regarding that particular company or the sector that the company is in, say, a new product being launched, any government policy on the sector, or even the appointment of new top executives may play a big role in how the market would react to said company.
You may also want to look at the company’s earnings reports, and (if applicable) you can also attend shareholder meetings to gain proper insights into what the company trajectory might be.
Short-term trading is known for giving you faster returns, and as much as that is true, you don’t want to be caught up in a frenzy of overtrading.
What overtrading refers to is when you buy and sell too much in a short period of time up to a point that the cost you endure for each transaction might actually shrink your returns or even worse, put you at a loss.
Instead of wiggling around with highly volatile stocks, you can also look to focus on diversifying your portfolio with high-quality stocks. It may take some time for you to see the gain, but it’s better than losing your money in a short-term frenzy.
4. Patience, not emotions
Follow your heart is a perfect line to pitch in for any Disney movies or Netflix rom-com, but it often doesn’t end well with investments.
What you should do is remain calm, assess the situation, know when to hold, and know when to let go — of course, based on the facts that you can get your hands on.
Some may be too emotionally attached to a certain stock that it blinded them to the fact that the stock is taking a dive for good. Some may be too anxious when they see a red bar that they tend to panic-sell their stocks. Both sides of the spectrum would usually not end well for your wallet.
What you should do is the remain calm and patient, and never give in to impulsiveness. Assess the market properly, get your facts right and then make a decision to hold, buy or sell.
On a side note — please — and we mean it, please don’t give in to social media sentiments. This is the most common mistake any trader can do, fear of missing out (FOMO) is the bane of any investors out there.
Sure, market movement is a product of the many, but more often than not, the “many” that you see in social media aren’t really as many as you think they are.
5. Consider getting guidance
If you are really new to the world of investment, you may want to consider getting guidance. Investing can be challenging and without proper knowledge, you may end up losing more money instead of earning them.
Having a guide, a mentor, a guru, or (whatever you choose to call them) is important to make sure that you can set realistic expectations and set your investment plans in accordance with said plans.
Be it, fellow friends who are seasoned investors, financial advisors, or investment classes — a new journey will be much easier when there’s proper guidance, but make sure you’re getting your dollars’ worth and not be mauled by any wolves in sheep’s clothing.
As many industries are, the investment side is not free from leeches and tyrants. Be wary of some financial gurus who either give you peanut-worth advice or even worse — some may try to manipulate their students into pumping a certain stock before they themselves dump it later on for profit.
Investing for beginners may be an interesting journey, it could be a rewarding journey, and it could be a challenging sight for the eyes. Regardless of what happens, as long as you know what you’re doing — or better- you know that you don’t know, there’s always room to improve and learn.
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None of the material above or on our website is to be construed as a solicitation, recommendation or offer to buy or sell any security, financial product or instrument. Investors should carefully consider if the security and/or product is suitable for them in view of their entire investment portfolio. All investing involves risks, including the possible loss of money invested, and past performance does not guarantee future performance.