When investing in stocks, it can help if you keep a few basic rules in mind. But be careful. These rules only give you a rough guide and no guarantee for a successful investment.
Invest only free money
Perhaps the most important rule of all. Only invest money that you will not need for a long time. If the price of a share is falling and you have to sell it because you need money, you may have made a loss. Also, do not take out a loan to buy shares. This way you can avoid getting into debt.
Only buy what you understand
When buying individual stocks, only buy shares in wholesale cabinets companies that you trust. Because if you don’t understand a company or an industry, you can’t judge whether the stock is a good investment.
Never put all your eggs in one basket
Spread your risk. Don’t just buy shares in one company, but in many different ones, from different countries and industries.
In relation to stock trading, you have to be able to keep calm. It can always happen that the price of a share falls. But if you spread your risk widely and only invest money that you don’t absolutely need, you can sit back and relax.
What buying strategies can you use when trading stocks?
When trading stocks, many investors follow a specific strategy that gives them security even in times of falling prices.
Value strategy: With this strategy, you judge stocks by their “intrinsic value”. This means, stocks are selected that are undervalued according to their indicators. The hope is, in the long term, a share should develop upwards and thus ensure high price gains.
Buy and hold strategy: This strategy means that you, the investor, buy shares and just hold onto them. So you don’t sell the securities too quickly, but simply wait for price gains to occur. This strategy is only for you if you own many different stocks and not just one company. Otherwise the risk of losing your money is too high.
Dividend strategy: With this strategy, investors choose stocks based on the size of their dividends. Dividends are the portion of profits that a publicly traded company pays out to its shareholders. So don’t buy shares in companies that have recently paid little or no dividends.