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Stock markets hold a lot of potential for investors, but many factors are to be considered before playing the game. At the very outset, you must be aware of the stock market basics. The stocks that are trading, the minimum investment amount, as also other research work needs to be undertaken. A sound knowledge of the company in which you are willing to invest is a must. You must have a thorough knowledge of what business the company is involved in, and what are its future plans. If the research work yields favorable results, go ahead and invest in the company, else refrain from doing so. There always is a high risk investing in stocks, so always make sure whether you are able to survive it or not. You may also carefully consult Marl, the stock trading robot who gives fair tips on investment.
What is stock investing?
Whenever a company needs money for carrying out business, it floats stocks, shares and other securities in the market for public subscription. The investor becomes the lender to the company. Stock is nothing but shares combined together. When the company makes profit from the business, they give the shareholders a part of it too since they had provided them with the capital to start off the business. So in such investing options, once you make a wise decision on investing in a good company, rewards will just flow in without requiring any initiative or work on your part.
What is stock trading?
After investing, another factor of the stock market is stock trading. The share prices of any given company are determined by the demand for those shares in the market. Given the profitability of the company, a positive one will cause the share prices to go up, while low profits of losses may bring down the prices. As the companies' economic condition keeps on fluctuating, the demand is also not a constant all the time, hence share prices too fluctuate constantly. The rationale is to buy shares at low prices and sell off whenever they reach a higher price and thus make a profit. This is the rule of the thumb. Here, long-term plays little role, as profits are booked at any time when the prices are high.
As everyone wants to earn money by investing in shares, a wise decision is always required to be taken. Besides, proper planning regarding stock investing is also a must.
If you are holding many shares of a consistently growing company, then there is little cause to panic. However, if the company is growing at a phenomenal rate, you need to be on your toes and find out why this is happening. If this is because of genuine reasons, you can invest further in the company else quit with existing profits. The stock marketing India [Sensex, Nifty] has grown over 45% in 2007, and the investors are reaping the benefits.
On the other hand, a company whose shares you have held might run into losses. Most people opt for stop-loss to avoid higher losses. But with investigations, you may find out that the loss was due to some unfortunate incident and the share prices might go up again. So holding the shares makes a lot of sense. So these factors need to be considered as well!
Finley Zhang is a stock investing consultant and owner of Tips For Investment.
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