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Basic Rules For Stock Trading

Jul 17, 2008
Do you know that stock trading is different from investing in stocks? Stock trading demands you to actively participate in the market while there is no need to do so when you are investing in shares. You have to buy and sell at the right time to gain good profits.

If you are aware of stock trading basics then you will know when to buy or sell your shares to get profits in short terms. The big investors contribute to nearly ninety percent of trading volume on major security exchanges. They are the leaders.

The institutions spend a big money to obtain the best analysis earlier than the others do. They consider that time is money. They value the time very much. However small individual investors like you and me cannot afford to have the resources that the big investors have. That indicates that the risk involved is higher for us than for the institutions.

We should be on guard against landing ourselves with investments that may underperform in the short term. The main advantage as a private investor is that we have over the institutions is flexibility, i.e. we do not have a lock in period for selling the shares that we hold unlike large institutional investors.

According to stock trading basics, we need to wait for the right opportunity to buy the shares. The buying opportunities come regularly and in an organized manner. You should study the price-earning ratio of a company before buying or selling.

This ratio gives us the value of the stock based on the earnings of the company. One of the stock trading basics is that this ratio is bound to be beneficial for a stock if the company has gone in for a beneficial inorganic expansion in the recent past.

As per another stock trading basics rules you should buy a stock when you hear positive news on the sector to which the company belongs. This can be due to some desirable regulatory laws or due to some drastic changes in international economic scenario.

If you have to buy the shares as per some plan then you should buy the shares that are sure winners. These tips on share trading can certainly help you to get regular income from stock trading.You will be sure of making handsome profits.
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