Knowledge best tool to handle investments

Fear and greed are two biggest enemies of an investor. If you are an investor who does not have control over emotions, then share market is definitely not your cup of tea. Stock market requires a person to be strong both technically and psychologically.

As Warren Buffett rightly said, never test the depth of river with both the feet. When a person loses money in stock market, he loses his confidence level also.

First and foremost, an important prerequisite to enter this business is you should be equipped with the knowledge of the subject.

Despite proper technical and fundamental analysis also one may have loss because stock market is subject to news also. News triggers stock price movements very sharply. So, news plays a pivotal role and it cannot be ignored.

We should never invest our entire capital into one or two stocks because if we lose money our confidence level to invest further comes down.

It is better to invest in small quantities and once you gain experience we can increase our capital and quantity. Before venturing directly into share market, paper trading and virtual trading would help to some extent.

Whenever there is a call from a Youtuber or a stockbroker, it is always better to make our own study through technical analysis and then take a decision to invest in any particular stock.

Never blindly follow any stockbroker or anyone who gives a particular call for any trade. If you want to make consistent profits, we need to be in the market consistently.

However good a stockbroker maybe never expect to be served everything on a platter. It is always beneficial when we select stock, analyse and study it and then take a decision on our own because end of the day when it is a loss it is you who have to bear the pain of losing money.

Those who trade in indices make profits, but their decision is backed by a strong analytical study. When we trade there is always a possibility of losing money and sometimes this develops a prudent habit in us.

Once we experience the pain of losing money, we tend to be more careful.

Some individuals refrain from trading because they opine investment gives a safer return. However, whether it is investment or trading, profit or loss is bound to occur.

Our strategy should be to earn more profit consistently and minimise losses on the other hand simultaneously.

(The author is a homemaker who dabbles in stock market investments in free time)