Guide to the Stock Market


eg: UK or Brides UK or Classical Art or Buy Music or Spirituality

Business & Money

Technology

Women

Health

Education

Family

Travel

Cars

Entertainment

Investment Plan In India

View:

Normally an investor expects two things from the share of a company in which he plans investments. Regular dividends and capital appreciation! With proper investment plan and choices, this objective is achievable. If your approach to investments is well organized, you need not worry about the uptrend and downtrends in the volatile share market. You can do very little about the volatility of the market; but you can certainly plan to remain unaffected by the swings in the share prices.

When you are in the process of building the portfolio, to start with, look out for those companies that have a good track record of taking care of their shareholders by paying regular dividends. Incremental growth in dividends every year is further indication that the company is prospering. This factor alone is not the pointer to the perfect heath of a company, but this is an important issue. Bonus shares and right issues can be expected from such companies. The rising rate of dividends acts like the shield of protection against inflation. A proven investments plan needs to take care of the following:

1. The strategy for selection of the shares must conform to a systematic form of analysis. The goal is to maximize the total return on investment for the holding period that has to be targeted at the time of investing, the risk tolerance levels, degree of portfolio diversification etc. The analyst visualizes how a share is going to move taking into consideration ?long? and ?short? positions. The disciplined approach to selection of the shares is the sure gateway to success.

2. With many thousands of shares listed in the stock exchanges, selection of shares is a complex job. No fool proof method can be devised to accurately predict the growth of a share as several factors interact on the price of a share. The price movement can not be estimated on speculation. Amidst all the confusion, certain yardsticks will have to be applied before deciding in favor of a particular share. The analytical components help to a great extent to arrive at near-correct conclusions.

3. Different economic sectors and industries will perform differently in varying conditions. Service sector industries perform well even during recession. Business cycles impact the sales of certain companies. A business analyst will monitor sectors that show signs of an impending turnaround and advise the prospective investor accordingly.

4. Quantitative Cumulative Value Analysis, also known as the fundamental analysis relates to the past records of earnings, sales, assets, management etc. These are all carefully scrutinized to assess the intrinsic value of a share. Compare the price thus arrived to the current market price to decide whether it is undervalued or overvalued. Similarly the method of Technical Analysis of the shares is also popular amongst the researchers and analysts.

5. Management issues: This is the acid gets for an investor. Human factors supercede all other issues in an organization. What is the perception of the management in these fast changing technological advances, which have the capacity to change the entire production and market scenes of the product, within a short period? Is the management capable to meet such eventualities? Does it have the alternative plan ready and is it in a position to implement it with the greatest possible speed to beat the competitors? The stock market wizard Warren Buffet observes, ?The primary test of managerial economic performance is achievement of a high earnings rate on equity capital employed (without undue leverage, accounting gimmickry, etc.) and not the achievement of consistent gains in earnings per share."

Set your goal, strategize well in time, make periodical risk assessments, make proper calculations about the profit potential, keep an alternative strategy ready, be in touch with a good broker and take his advice, when in doubt. The investment plan derives power from your discipline and sense of timing for trading.

Investment Plan In India

The first is that you need money to meet your daily necessities. The second is that you can spare money to invest for your future.

If you were a beginner in stock trading, it would be risky to depend upon stock trading for income to meet your day-to-day needs. For this you may have to become a day trader. Day trading is a full time vocation and like any other vocation, you need to have a thorough understanding and hand- on- experiences of the ins and outs of day trading.

You have to be well versed with the stock trading terminology and its meanings and implications. For example, you need to be clear about such concepts as support or resistance levels, going short or long, stop loss orders and much more. Mere theoretical understanding of these operational terms may not be enough. You have to work them out in practical trading situations. They should be part of your active stock trading vocabulary and understanding. These are some of the tools of day trading in stocks and you must be an expert in using them instantly whenever and wherever they are needed.

You have to sit glued to your monitor right from the moment the stock exchange opens up for the day in the morning and continue sitting till the working time is over in the evening.

You have to keep watching the fluctuations in the price of your stock from moment to moment and immediately decide when to buy or sell a stock. You have to make your decisions in a flash and act fast. If you keep thinking whether or not to hit the buttons to place the orders, the price situation may undergo a sea change to your detriment. It also happens quite often that in between the time you decide to place your order and the moment you press the button on your monitor screen for its execution, the price may change for better or worse.

Besides watching the computer terminal all the time to view the rise and fall of the prices of the stocks, you have to keep your eyes and ears glued to the fast flowing information about the financial situations of the companies whose stocks you are trading or intend to trade.

Companies often take financial decisions, which have a deep bearing upon the prices of their shares. The quarterly reports, merger plans, board meetings, sales orders, government's financial policies, the political situation in the county, interest rates, taxation decisions, and numerous other factors and variables determine the prices of the stocks. You have to be always in a state of high alert. This kind of situation may cause mental tension at least to the beginners, which may in turn affect their performance and decisions.

If you are a beginner, the best course is to take to stock trading gradually in short, simple and comparatively risk free investment steps. Do not invest large amounts of money in stock trading even if you can afford to. Your stock broker may have plans to facilitate your initiation in the stock trading in a pleasant manner.

There are some stock trading sites on the internet that impart training in stock trading through simulated environment. You are educated about the various stock trading tools such as charts, symbol finders, news flashes, research methods and so on. You are provided with dummy dollar bills and are advised to invest-- buy and sell-- by using various stock trading tools. This gives you a practical feel of the vocation.

Having acquired some knowledge from simulated stock trading environment, you may start with investing as little as $5 per trade in a stock. Watch the performance of the stock, how its price rises or falls.

You may find that some high value stocks may have high prices, which you cannot afford to pay. Search on the internet and you may find brokerage firms which provide for investing in fractional shares of such high value stocks. You can buy one tenth or even one hundredth of a share of a high value stock. There are stock brokers which offer you a number of free trades for opening an account with them. Stock trading can be a fun without involving any huge financial risks.

When you acquire sufficient experience and know-how of stock trading, you may develop a stock trading plan that best suits your needs.

Related Articles
Author
Most Popular

•	Best Investment In India, by Grant Eckert
•	Best Investment Options In India, by Grant Segall
•	Best Investment Plan In India, by Jeff Syrov
•	Foreign Investment In India, by Properties Mls
•	Investment Banking In India, by Financial

Vijay has sinced written about articles on various topics from Investing and Trading, Painting and Investing and Trading. SogoTrade stock broker:Sogotrade free research tools:. Vijay's top article generates over 49500 views. to your Favourites.

Beer Gifts For Him
Again youll never go wrong with a fine selection of ales themselves for, but these are all great ideas to get that perfect man or women who cant get enough beer for that special occasion