Most people dream of becoming a Millionaire; however only a few end up becoming one. One of the seemingly easiest ways of making a "fast Buck" has traditionally meant a big win at the race course or a million dollar lotto jackpot. This route depends heavily on a single factor called "Luck." In the modern business world, howeve,r there is another avenue available by which to make millions in a relatively short time. Not only is it completely legit, the risk involved is far lower and the probability of a huge win much higher. The thrill and excitement of the stock market is quite like that of watching a horse race, seeing the price of the stock you bought (just a few months ago) at a pittance shoot through the roof is indeed unparalleled. In fact, fortunes are made and lost all in the course of a single trading day in at stock market.
Recently your "good for nothing" cousin made a huge packet buying & selling stocks. If he can do it, then why can't you? Now that you're looking to become a millionaire overnight through this route, is it all as easy as it seems? For starters here's the catch: It is not where you invest your money, but how you invest it that decides the profits that you may or may not reap. In other words, stocks are only as good as the investor; they respond to the individual's business acumen.
What is offered here is not a "hot tip" or a "magic mantra" as it were, but some "soft" tips that will help you play the stock market sensibly without burning your fingers and make money in the bargain!
AVOID HERD MENTALITY
Don't just do what the other investors are doing blindly. People generally tend to brag about their success or the killing they made at the stock market, but they more often than not never bring the number of times they bit the dust to light. Your relative or friend may have made money in the past, but there's no guarantee he or she will continue to do so indefinitely in the future. Do your research before you put your money in and always trust your gut instinct. Time and again the gut instinct has been known to save investors from burning their investment.
DON'T COMMIT LARGE AMOUNTS OF MONEY
As you begin your quest for millions, remember that it will take a while before you can get a hang of the stock market. It is not easy to pick up the right stocks or keep track of them when you're just beginning. It will take you quite a while to settle down. So even if you can afford to take risks, don't commit a huge amount of money.
Start with small amounts and increase your investments as your confidence and grasp of the markets grows.
Always invest only the surplus money that you may have and for which you do not have any immediate plans. Equity, as an investment, carries built-in risk, and investing short-term with money drawn from another secure investment may force you to quit at the wrong time.
DON'T TRADE FOR SHORT-TERM
Short-term trading is a highly risky game, and sometimes it is based purely on speculation. The nature of this trade demands a high level of time commitment to track scrips and to study and analyse huge volume of information (that may not be verifiable) before arriving at an informed decision.
Some investors try to play in multiple markets to try and leverage the opening and closing time difference between bourses. This strategy may be theoretically viable but is not feasible in actual practice over a sustained period of time.
For small investors the best bet is to invest long-term in fundamentally strong companies that can absorb the ups and downs of the market without causing a huge hole in your investment. There is no set formula for fundamental analysis. You have to study various indicators like growth in that business sector, company performance both in terms of volumes, turnover and bottom lines.
There are a number of statistical indicators like price to earning ratio, dividend paid, debt-equity ratio, return on capital employed etc. You may also base your investment decision based on the nature of business, the company and its performance in the last three years etc.
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