How to Deal with the Stock Market - Personal Experience

Keep a check on share prices and movements on a daily basis. Never be greedy, book your profits keeping a certain target

My own initial experience with the stock market was a disaster where I lost quite a bit of my hard earned money. But i was fascinated by the entire concept, and by the stories that I got to read about some people who had become wealthy by trading in stock market, so wanted to give it another try..; I spoke to a number of people and almost everyone had some bitter experience or the other to recount and share, and many had hardly made any profit in day trading. Almost all of them had lost money and were in the process of recovering their losses, it seemed like such a bleak situation. Sometime back I happened to meet a family friend at a wedding, and I got talking to him .

While talking he told me that he had taken VRS (voluntary retirement scheme) from his bank job as an Officer, and now concentrated on the stock market. I was of course much interested in knowing about his experiences..; so , later met him and spoke about it. I was extremely surprised to hear that he had never ever lost any money except when he was very young and very raw to the stock market experiences.Whereas now on every trading day he made an average profit of Rs 800-Rs 1000, which he said was more than enough money for him ( Rs 16,000-20,000 per month). This seemed too good to be true. He had been doing this for a long time and invested a lot of time on researching about various stocks and their movements, and was reaping the benefits of all that hard work..;He took an active interest in following all kinds of news items that could effect the Stock Market . These were some of the simple but time tested strategies he used while trading ..

  1. Never invest huge amounts of money in any one share - Buy shares at Market dips.
  2. Never be greedy, book your profits keeping a certain target.
  3. Try to have some knowledge of the shares you want to invest and trade in and follow the trend of share movement.
  4. Keep a check on share prices and movements on a daily basis.

Now, after several trials and errors I too have come to a safe method of trading which is quite safe Here is how I do it based on the advise given to me by this friend.. I have bought some shares at various points of time, generally when the markets are down and the prices have come down considerably. When the market is booming and my share prices have gone up considerably I sell these shares and also put a buying price ... For example - If , I have 100 shares from companies A,B,C, and D, and prices of all these shares have gone up much higher than what I paid for them , then I call up my broker and put a sale price, and once that is executed , I put a much lower buy price.( for example if I sell share A at Rs145, I put a buy price at Rs 135) and if the prices fall and this buy order gets executed then I have made a tidy profit of Rs.10 per share and the shares are back with me . But on the other hand if the share price goes up , then I have to give delivery of the shares by the end of the period. And wait may be for a week at the most or sometimes even less than that time for the prices to come down considerably, when I buy back the shares..keep doing this whenever there is an opportunity.. But take care to keep a personal account of all your trades.

The profits may not be huge, but they are steady . The most important factor to be considered is that there is very little risk and losses involved here. I have bought more shares from the little amount of profits that I have made. I have also realised that it is better to make smaller profits by playing safe than to go for huge losses by taking any risks because all said and done Stock Market is addictive and is a very volatile place which can ruin you financially if you are not cautious..

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M.J. Grueso
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Posted on Jul 7, 2011