Guidelines For a Beginner In Share Trading

There are thousands of people who take part in share trading and are quite successful in the field of trading.  The outcome being profitable is not a matter of luck, but the application of simple principles which have been derived from the experiences of the investors over a period of time.

However, in the case of trading of digital currencies, anyone can trade without much preparation as there are many automated trading software’s which is capable of taking calculated decisions on their own using mathematical algorithms.  But be cautious about the fraudulent software’s that have come up in the market.  Aurora mine is one such software that is just a scam and you can read the reviews here.

Below mentioned are few pointers one should keep in mind while doing trading in shares.

Pointers to keep in mind

Set goals for long-term- Before you make the investment, you need to know the purpose of investing and the timeline in which you need the funds.  Go for investment in shares only if you don’t need the funds in short-term as the market is volatile and it is not certain that you will be able to get back the amount invested with profit in short period of time.

The growth of the portfolio depends on the following factors:

  • The capital you have invested
  • The net annual earnings you gain from the capital
  • Period of investment

Understand your tolerance to risk- Risk tolerance is the investor’s psychological trait which is influenced by income, education and wealth. As these things increase, your tolerance to risk to increases.  Also, when you gain more knowledge about the investment strategies, the risk tolerance will increase as you are more confident in investing and your decision will not be based on fear.  Once you understand your tolerance to risk, you can avoid those investments that will make you anxious.

Diversify the investments- You need to conduct proper research to quantify the risk.  The popular way to manage the risk is by diversifying your investment portfolio.  For instance, if you have shares of five different companies in different sectors which you are expecting to grow.  But the circumstances might change in the future.  By the end of a year, you might have one or two company’s shares which have not have grown as expected.  But others would have outperformed. Since you have not put all your money in a single company, you will not face any loss.