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Three Golden Rules For Investing In Stock Markets

Jul 4, 2008
There is not shortcut to making money in the real world. That holds true for the stock markets as well. You will keep hearing all the get rich quick schemes for making money in the stock markets. They usually promise a lot but there are underlying if and buts to each of these schemes.

If you are in the stock markets for long term then the solution is to follow a few golden rules which will help achieve your objective of making money from the stock markets as well as avoid any pitfalls on the road to the riches.

The three golden rules for stock market investing are

Think Long term

If you are looking for amazing returns in the short term then the risk definitely will be very very high. People definitely take risky bets in the short term and make huge amounts of money. You will also hear stories about your friend or a relative making thousands of dollars in a few days. These are bets which could have turned either way. As a risk averse and a cautious investor you need to see the big picture. The rule is that do not get swayed by any of these and understand what you need in the long term. You do not want your money to be gone but you need to have earned decent amount of returns on it. In a long term scenario you will ride out any slumps in the market and it has been proven historically that stock markets earn better than any other instrument if you take a time period of 10 years or more.

Buy Low and Sell High

Never get swayed by the market sentiments when sudden news results in stock selling. In fact at that time when everybody is selling you should be buying. It is the time when you should have cash. That should be your mantra. Every fall should be a buying opportunity for you. It is a tough thing to do but once you achieve it you will make huge amounts of money in the market. That way you lower your cost of holding and gain huge percentages when the market is on the upswing. You can then sell at the higher prices and also you will have cash when the market is in a downturn as opposed to your money being locked in the shares.

Patience & Due Diligence

The third rule is that you need to have patience and determination in the stock markets. Patience to last for that long term benefit that you had envisaged when your entered the market. Most investors fall prey to the fact that they look short term and the minute they encounter losses they sell stocks and get out of the market. In fact at that time they should be investing amore in the market to accumulate more stocks at cheaper prices.
About the Author
Stock market for beginners tips are for people who are looking for investing in the market.Stock market for beginners is an easy thing to crack if you have the long term view.
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