Becoming a successful trader is not easy. There are a lot of things that add up to becoming a profitable trader. Everybody wants a taste of the market, but all can’t suffice the bitterness it brings in. Therefore, many leave the same during their learning phase.
The process of becoming a successful trader begins with one having the patience to deal with the market’s volatility. It takes time for one to understand and predict the upcoming movement in the market.
However, with the hacks mentioned below, one can become a successful trader in the long run.
Know about the charges
The stock market has changed completely. Now, one doesn’t need to call up his agent to buy or sell stocks; instead, they can do it with just a click on their handset. Whatsoever, the application charges a nominal fee.
This is something one must look out for before opening his trading accounts. Many fraud applications in the market get you involved in several hidden charges that are impossible to avoid. A person should always lookout for the most trustworthy application in the market. This is possible if the person checks the testimonials before signing up a trading account with that company.
Pick up your industry
Investing in shares is not just about technical analysis. What matters is how the management is dealing with its clients. To perform high-quality due-diligence, one must have all the knowledge related to the industry. This is why corporates lookout to hire specialized in every industry they want to invest in.
It is important to diversify your portfolio; however, investing in something you aren’t aware of can get you into unwanted leverage. Therefore, pick up 4-5 industries that you are ready to grind about.
Type of Investments
Based on the holding period, we can easily classify an investment into several sub-headings. These sub-headings can determine a person’s risk ability, which will help to evaluate the risk-return management of the individual.
When a person is looking for organic growth in the market, they go for long-term investment. Instead of playing with the market participants’ volatility, the investor is trusting the management and their way of working. The holding period can vary from 6 months to any duration of time. Investor here looks out for a return of 30-40% (minimum).
Similarly, when a person uses technical analysis for his investment, the investment duration is quite short. It can be for a day (Day trading or Intraday) or a week or more (Swing Trading). Here, the investor is looking to play with the market’s volatility and gain the upper hand. However, to be on the safe side, investors don’t expect more than 2-3% from the market when they are going for Day trading.
Don’t be fooled by the Market
Markets can be unexpected. The fall in the market during the Covid-19 pandemic made us realize that it is all about the faith that one has in the company. With all the companies being shut down during the pandemic, most of the investors thought it would be best to withdraw their funds from the market.
However, when the lockdown was over, the market started recovering and reached its original performance mark. NASDAQ, which fell from 9800 to 6800 points during March 2020, showed an upward movement (between April-Nov. 2020) and reached 12000 points (as of Nov. 2020).
Similarly, other indexes showed positive results in the long run.
Keep track of FII and DII
FII stands for Foreign Institutional Investment while DII stands for Domestic Institutional Investment. When a person is keeping track of the cash flow, he is aware of the market expectations.
The whole Covid-19 situation can be a great example of this point. FII brought about a great change in the market as they found an opportunity to earn a greater profit. Therefore, by tracking FII and DII, one can decide whether the market will be bullish or bearish in the near future.
Following the hacks mentioned above, one can get the best results possible. Apart from it, getting the right knowledge and trading account for fast transactions is very necessary.