When it comes to investing in the stock market, the very first thing that comes in the mind of the average investor is to protect his trading capital. It is very much important for every trader to minimize his losses to the maximum possible extent. The fact is not every trade that is being initiated will be going right. It is indeed a tough lesson that has to be learnt by the average trader. With the stock market filled with pitfalls and risks, getting profits all the time is simply a day dream and very tough to be achieved. If the losses are not kept small, then the trader is sure to suffer huge losses and even suffer financially in the long run. This can be equally devastating for his trading capital including his psychological capital. Hence, the principle here is to sell the stock, in case, it drops around 10% below purchase price. Fortune can be made in the stock market, only if the decision is made correctly and wisely. Educated decisions can help minimize losses and maximize profits. It is considered to be the key element towards learning to get success in this risky and volatile market.
Methods to analyze the stock
There are basically two major ways for analyzing a stock, namely, technical analysis and fundamental analysis. Traders are said to have debate on this topic for a very long time, with merits of each of them to be studied upon. The key here is to incorporate properly both the methods. It does help the person to put odds solidly in his favor. As a matter of fact, successful trading is said to be based upon probabilities along with sound money management. At the same time, several factors are to be put in favor prior to taking position in this market.
Some fundamental analysis
This is more about using data in real time, like sales numbers for evaluation of each individual stock. This analysis is regarded to be the foundation that is required when acquiring any stock. The data shared tends to specify about the stock quality. An important factor is about consistent earnings improvement. It is undoubtedly the fuel which affects the stock price. Stocks will be required having annual earnings at a share growth rate being about 30% or more. It becomes crucial to analyze the stock fundamentals, so as to win and make profits in the current stock market.
About technical analysis
It is considered to be a method to evaluate securities and this is done by analyzing statistics that is market activity generated. It includes volume and price. Basically, the person is required to study the market movement, especially using charts. It allows the person to identify the demand and supply any particular stock. Daily charts are to be used for timing purposes, while weekly charts get used for long term perspective. The key part here is to learn to identify the traditionally proven price patterns. It can help improve dramatically the stock market results. The Best Trading Platform offered by the reputed brokers can help the person to emerge a winner.