Congratulations for entering the Stock Market. Most of the youngsters today are new to the stock market. Remember, many of your parents have not invested in stocks and will be scared to their bones if you tell them about entering the stock market. The best they have done is fixed deposits, provident funds, and to some extend touched on mutual funds, that too at forced advice of their bank managers. So, there are few to hand-hold you through the initial days in the share market.
You can talk to that odd friend who is always tracking the market, or your local bank advisor, or talk to our support team, or tread the path alone. But, most of these initial days, you are going to have Sensex on your brain throughout the day. Here’re 5 things that you need to avoid doing:
- Ignore Daily Net Profit or Loss:Your investment amount is likely to be meagre in the beginning. If you are going to keep a track of net profit or loss on regular basis, then you are going to lose your mind. The market keeps fluctuating everyday. Some days it is up, other days it is down. You might be winning someday; on other days you might be losing. Stop thinking about it regularly. Think about long-term. You will gradually start noticing your fund value increasing.
- Over-diversifying:Diversification is good, but going overboard is never suggested. And, when you are starting with a small sum of money, over-diversification may kill your profits and leave you in sorry state-of-affairs. Select few stocks after detailed analysis and consulting an expert and stay invested in them.
- Tracking the market movers & top performers ‘daily’:After entering the stock market, your day would start with the news checking the day’s market movers and top performers. Thinking one stock might grow a lot in a single day, might lead you to Sell your existing performing stock in pursuit of bigger profits. This is the worst move one can make in the initial days, shifting between stocks continuously.
- Not caring about brokerage charges:Brokerage is charged on every transaction, every time you buy or sell. Trading platforms main source of earning is brokerage. So the more you keep buying and selling at the wink of a news, a fraction of your fund is getting charged as brokerage. This makes your profit less and losses more. Keep a close eye at your brokerage charges, and transact only when you are sure.
- Getting emotionally influenced with market news and recommendations:Remember, all of these companies are listed companies and are there because they have the potential to become big or bigger. Every trader and analyst today has his or her own view about how the market is going to respond to economic situations. Listen to them but do not get emotionally influenced with whatever they say. Vet the news yourself and do your own calculations. If you believe and numbers show that your portfolio is going to give returns, stay invested.
Warren Buffet said – “Risk comes from not knowing what you are doing”
