Stock trading is currently more popular among private investors than ever before. On the one hand, this is due to the technical possibilities of the Internet, and on the other hand, equities are currently one of the few forms of investment whose return is promising. The UBS Yield Enhancement Strategy really works perfectly now. If you go into the file trading, should note the following tips:
Without Knowledge, Long-Term Profit Is Impossible
Above all else, those who want to be successful in trading stocks must be willing to deal comprehensively with the various companies, sectors, diversification, strategies and economic environments. Only then can investors assess:
- Whether a stock price is likely to make a long-term profit.
- A stock is undervalued.
- A stock should be purchased long term or short term price gains are more likely.
- The return is likely increased by dividends.
- What changes on the stock price
- What news actually reduces or increases the value of the stock and what changes are attributable to the psychology of investors.
This is especially true before buying a stock, but the need remains. Anyone who buys shares must expect that significant price changes can occur at any time, which necessitates trading. Investors should be aware that time must be spent after the stock purchase to successfully trade stocks.
Shares Must Fit the Goals
Beginners in particular often make two mistakes: Either they invest in stocks that are too risky or too low risk or stock trading basically does not fit in with the pursued investment strategy. Therefore, beginners in stock trading should ask themselves the following questions:
- What goals do I pursue with my investment? Are other forms of investment better suited?
Especially “safe” fixed-income investments are often not an option at low interest rates, as they bring little return. However, there are other options, such as funds where risk is often more dispersed than a single investor could achieve. Again, risk and return are variable.
- What advantages and disadvantages does the stock offer? How is she rated by the analysts? What has to happen to increase in value and which factors are against it? What events, changes in the economy or management failures could cause the stock to lose value? How likely is it that the company is pursuing a sustainable, sustainable concept?
Never Neglect Risk Spreading and Money management
One of the most important success factors in equities is undoubtedly risk and money management. Lurking here are numerous pitfalls that can make investing in stocks risky.
One of the most common mistakes made by newcomers is that they do not do enough risk management. They do not spread their risk properly, invest in too few different stocks, or just securities from companies that benefit from the same economic conditions.
In order to achieve sufficient risk diversification, however, it is necessary to use capital as manifold as possible. This applies on a large scale to the different types of investments, in a middle step for dividing the capital for shares into different companies and finally for the selection of the securities.
It is recommended to divide the capital between eight and ten stocks, which ideally come from different countries, sectors and possibly even continents. More than ten stocks would allow for even better diversification, but a larger number of shares for private investors too poorly manageable.