One says, "I bought shares of "XYZ Company" for Rs.2200, but as soon as I did, the price dropped to Rs.2000." I feel sad. Another comes with a different version: "I sold "XYZ Company" at Rs.2000, and that same evening, it went up to Rs.2400. I lost Rs.400 per share, but that was just in my head."
Solution:
You can buy more shares at Rs.2000, which will lower your total cost to buy. This has to be done only if you believe in the company's basics, its management, and its future.
To do this, you'll need money on hand.
Investing money should be split in half. Then set aside half of the cash and only invest the other half. So if you need to buy more of a stock when its price goes down, you have the cash to do so.
Also, if you have 200 shares of XYZ Company, you can now sell 100 for Rs.2200 and 100 for Rs.2000.
The price goes up to Rs.2400 after that. Don't sell more than 100 shares. Then, if the price went up even more, you could sell some shares. And make money at the rally by taking part.
Next The price went up after you sold the share. The answer is to never sell all of your shares at once. Don't sell more than half of your shares. So if the price goes up later, you still have the other 50 percent to sell and make a profit.
Before investing and buying on tips, the golden rule is to do your own analysis of the stock. Also, you should only invest in companies that pay dividends every year. To make sure you're not putting money into companies that lose money.
Every market expert will tell you to do an analysis of your stocks before you put money into the stock market.
No one tells you how, though.
Well, in my next article, I'll talk about how to do stock analysis using tools like financial ratios and checking the track records of companies you want to invest in.
P.S. If you're not from India, just change Rs. to your own currency to understand the article:)
