Investment Rules for Share Market

 i) Buy under priced shares, it is better to buy a little high priced share of a growing company having future prospects in its business. Not growing or of no future growth company’s share at low price would be costly in the long run.


ii) Do not put all your money in one basket i.e. portfolio diversification is a good strategy.


iii) Don’t hurry up to buy shares. 

Pick the stock whose fundamentals are good and wait for the bearish market, even if there is no downside in the market you must have a list of companies. Analyzed, studied, convincing financial statements. If the stock price of the company held by you is falling then don't be afraid of it, be patient and wait for a moment because it is a normal phenomenon of the stock market. It is falling and rising by the time. If the company is fundamentally strong then hold it and get a benefit of returns awarded by the company until the company is mismanaged or future growth is halted or its services are not in demand in the market then sell them for investment purpose.


iv) There should be two types of stock; one is for investment and the other is for trading purposes. Some of the money should be invested in short term trading and make money in trading of trending stocks – only the profit portion of investment would be rational to be used in trading, as trading is risky. In risky stocks you should buy the most diversified stocks.


                       100

90 Investing 10 Trading

    ↓

Profit               →         Trading

                                        ↓

                                     Profit

                                        ↓

                            Reinvestment


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