You buy and price falls,you sell and price rises.Its a common investor problem.Doesi t always happen with you?...Then read.
One say's "I bought "XYZ Company" at Rs.2200 and immediately after I
bought the stock price dropped to Rs.2000." I feel sad. Another comes
with a different version "I sold "XYZ Company" at Rs.2000 and it went
up to Rs.2400 same evening" I made an imaginary loss of Rs.400 per
share.
Solution:
You can buy more shares @ Rs.2000 and reduce your overall buying cost.
This has to be done only if believe in the fundamentals,management and
the future prospects of the company.
To do this you need to keep money ready.whatever money you have and
want to invest,split it into two parts. Then keep 50% cash aside, only
invest with other 50%.So if need to buy more of any stock when the
price falls you have ready cash.
Also now if you have 200 shares of XYZ Company 100@Rs.2200 and
100@Rs.2000.Then the price goes up to Rs.2400. Sell only 100 of the
shares.Then if the price further shot up, you have some shares to sell
And participate in the rally to make money.
Next You sold the share and the price went up. The solutoion to this is
never sell all the shares at one time.Sell only 50% of your shares.So
if he price goes up later you still have the other 50% to sell and make
profit.
The golden Rule is to first do your own analysis of the stock before
investing and buy on tips. Also invest only in companies which declare
dividends every year. To be sure that you are not investing in loss
making companies.
Every Market expert advices to do your stock analysis before investind in the stock market.
But nobody tells you how.
Well in my next article I will write about how to do stock anaysis
using various tools such as financial ratios and by checking the track
records of the comapnies you plan to invest in.
P.S: If you are not Indian then replace the Rs. into your own local curreny to understand the artilce :)
