4 Golden Rules of Stock Market | How to invest in Stock Market | for Beginners

FOUR Golden RULES of Share Market | How to invest in Stock Market | for Beginners

FOUR Golden MANTRAS of Share Market  How to invest in Share Market  for Beginners

We strongly believed that Stockmarket is one of the best investment platforms to park your hard-earned money. 

Now as for historical statistics stock markets are presumed the best returns in comparison to any other investment platform in the world, but statistics also reveal that only 3% of people make money in stock markets.  

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98% of investors which mainly include retail investors are on the losing side and the only reason for that is retail investors lack the necessary investment knowledge. 

They are always easily misguided.  So in this article, we wish to reveal the 10 golden mantras of stock markets.  

If you follow these mantras religiously you could become one of that 2% of investors who make money in the stock markets.  

Rule 1

In stock markets, all retail investors go to a very funny experience. Whenever they buy a stock it starts falling and whenever they sell a stock it starts rising from their own.  

Ridiculously does this happen to you as well?  Let's understand why exactly this is happening.  

Mr. Rao who's a retail investor friend of ours and wants to buy his favorite stock big cellular’s. Let's see the current market price of the big cellular. 

It's currently trading at 50 rupees. Now over a period of time, this stock goes from 50 to 60,  60 to 70, and subsequently which is hundred rupees. 

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So we call this rise as an uptrend. Now a friend Rao has been watching the stock move from fifty to hundred but he is not yet bought it. 

Well, let's see what happens next.  Now after the massive uptrend this stock bleeds and fluctuates a bit 100 to 105, 105 to 100 again, and 100 to 95.  

So because the sideways movement has consolidation now a friend Rao still not bought this stock.  He's still watching it consolidate now.  

Let's see what happens next.  Now all of a sudden one day this stock starts falling 100 to 90, 90 to 80, 80 to 60 and back again to 50 rupees. 

It's the same level from where Mr. Rahul has been watching the stock grown.  So we call this fall or downtrend.  This stock is in a downtrend now.  

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Mr. Rao saw the stock rise from fifty to hundred and now when the stock is back to fifty rupees.  

He sees this as a tremendous buying opportunity and obviously because it believes that the stock will rise again to 100 rupees levels giving him a 100 percent profit.  

So with this thought, Mr. Rao goes ahead and buys mixed cellular at 50 rupees and this is where 98% of retail investors go wrong.  

The moment Mr. Rahul buys the stock starts falling 50 to 40, 40 to 30, 30 to 20 and then through 10 rupees.  

Obviously, because the stock is in a downtrend. It's falling star investors are just dumping it.  Let's do a health check on Mr. Rao on seeing the stock at 10 rupees.  

Mr. Rao is utterly disappointed.  He never dared to sell the stock while it was falling because all the way he always felt that the stock would move up.  

It was over but that never happened now.  

FOUR Golden MANTRAS of Share Market  How to invest in Share Market  for Beginners

Let's say for almost six months the stock consolidates between 10 to 15 rupees.  

Then one fine day it starts moving up again it's safe to say that the uptrend of the stock has started again 10 to 20 20 to 30 30 to 50 rupees again.  

Mr. Rao is seeing the stock back at 50 rupees.  It's been a while that he has bought the stock and has not seen a growth he has also gone to a lot of emotion when the stock fell so to be he doesn't really care for profits. 

He just wants his invested capital back.  He's not sure what the future holds for the stock. So he goes ahead and sells it at 50 rupees and what happens next.  

The stock starts running 50 to 60, 60 to 80, 80 to 100 and it lands 150 rupees.  

Hope almost all the retail investors go through this experience they buy stock in down trees and sell in an uptrend.  Friends, we reveal the first mantra here

“STOCKS move in trends always BUY in an UPTREND.  SELL in a DOWNTREND and do NOTHING in a CONSOLIDATION trend. Never go AGAINST THE TREND because the TREND IS OUR BEST FRIEND.”

Friends stocks keep changing the trends. Every uptrend is followed by a downtrend and every downtrend is followed by an uptrend. There are those consolidation phases that come in between. 

That's the nature of power stock smooth and that's how opportunities they keep coming in the stock markets this is natural and it's very very healthy for the market overall.  

If you understand this, you understand stock markets much better than before this is the secret.

Rule 2

I wish to share something very interesting about a very popular steel stock in August 1997.  Share of Tata Steel was trading at 140 rupees. In December 2008 the share came back to the 140 rupees.  

Can you believe this in these ten years the company in Grow in many folds but the share price it came back to those levels as it was 10 years back. Why? 

you must have also come across shares, there have doubled, tripled, quadrupled in a year.

How does the stock market work?

FOUR Golden MANTRAS of Share Market  How to invest in Share Market  for Beginners

For example, in January 2017, India bull’s ventures were trading at 22 rupees and in September the same year, the share was trading at 280 rupees.  

In these eight to nine months it grew twelve times.  So does it means that the business of India bulls ventures also grows 12 times in eight months? 

Not at all, then what made the stock run so fast, I mean with that kind of speed it could haven't actually beaten even Husain Bolt. So jokes apart, its economics.  

It's pure demand and supply.  When a lot of buyers start showing interest in a stock they start buying it with huge quantities, for whatever the reasons maybe, the demand for the stock it goes up and the price of the stock also starts increasing, It's natural.  

Now you may not be able to calculate the peak, it can grow to any level.  So long as the demand keeps flowing in.  

A one fine day, the same set of investors lose interest in the stock and start dumping it. 

This leads to increased supply, the supply powers demand and the stock starts falling.

Now again you will not be able to calculate the bottom.  It can fall to any level so long as the supply keeps overpowering the demand.  

So in short the rise and the fall of the stock cannot be always related to the business and the operations of the company.  We reveal the second one prior.

“The business of a company is not necessarily related to its share price movement.  Shares go up with an increase in DEMAND and fall with an increase in SUPPLY.” 

So when will the demand go up?  When will supply come in? This is all research, its calculation.  

Basically, it's a thorough study and it's important to understand and get your calculations right in this demand-supply again. 

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I mean what's the use if you buy a good stock when it is in a heavy supply mode and similarly, you can make profits by buying a bad stock in a heavy demand zone, that's the trick.

Rule 3

Now a lot of retail investors invest on the basis of a new scene in either newspapers or news channels and if you've been doing that too there's a red signal (caution) for you.  

This is a trap that's late only for you. Let's understand how it works. Now when there is something positive about to happen in a company.  

The people related to the company, their friend's relatives already know about it and start accumulating the shares of the company. 

This leads to an increase in demand and the stock rise it just goes up. After the stock has moved up significantly, these people decide to sell their shares and make some good profits. 

But to sell the shares that holding in huge quantities they need a massive number of buyers. Also so these smart people plant positive news about the company in the so-called paid media.  

Retail investors read this news, get excited, and start buying shares of that company.  Now while you are buying hear, they are selling, and mind you they are selling in huge quantities.  

So this leads to increased supply and the stock falls sharply below you're buying prices.  We reveal the third mantra here

“Do not INVEST on the basis of a new scene in MEDIA.  The news is often paid and ‘PLANTED’ to misguide retail investors”

Now we are not saying that the news is always wrong that cannot be it's just that it's delivered to you very late and of course for selfish reasons.  

So by the time, it reaches you the stock is already valid and is not waiting to fall.  There have been a number of instances in the past where despite the news is very positive, the share prices of the company have fallen significantly.  

When the people related to the company to accumulated shares huge quantities.

Rule 4

Friends I am here given to the example today.  A small little coin I'm going to toss this coin, understand that whenever a point is tossed the chances of either a heads or a tails is always 50/50.  

The outcome does not depend at all on the past results.  The same analogy is applicable to intraday trading as well.  

For your information, intraday trading refers to buying and selling shares within the same trading day.  

All positions should be closed before the market closes for the trading day.  

FOUR Golden MANTRAS of Share Market  How to invest in Share Market  for Beginners

So just like when a coin is tossed and you are not sure if it would be a heads or tails in intraday trading. 

You can never be sure if today a stock would go up or it would fall down and yes, it's not dependent on the past movement of the stock. So no analysis is going to work here. 

Remember the chances are always 50/50 and whenever you take a 50/50 chance. You are indeed gambling.  

So intraday trading is like gambling and we all know gambling is a sure-shot way of losing money.  

It's the same as gambling this casino to make a fortune. So let me give you our fourth mantra

“Never do INTRA-DAY trading.  It's a sure shot way to lose your hard-earned money.”

In all these years we have not seen a single investor making money in intraday trading. Not even a single investor. 

So if you don't trust us and you could try doing it yourself and see the results. Intraday trading gives you a lot of excitement but it never gives you profits.  

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