What precautions should one take before investing in the stock market?

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Saurabh Guptahttp://karekaise.in
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The stock market is a market of uncertainty. Investing in the stock market is more risky than other investments. Taking some precautions before investing in the stock market reduces the investment risk. In this article you are going to get information about how you can secure your investment. What precautions should one take before investing in the stock market?

Before investing in share market, you must have knowledge of share market. While investing in the share market, you need to know the mathematics of the stock market. By following the points given below, you can reduce the risk on your investment.

Build a Diversified Portfolio


Build a diversified portfolio while investing in the stock market. Diversified portfolio means do not invest in the stock of only one company. If you want to invest 1 lakh rupees, then you can invest 20-20 thousand in different stocks.

In this way, the risk is reduced by dividing the investment into different company shares. If for some reason a stock declines, then your other investment is safe. So always build a diversified portfolio.

 Do not trade with too much leverage


You should always invest according to your capital. Do not buy more shares at once in the greed of becoming a millionaire from the stock market.

Never over trading in share market.Trading according to your capacity.Leverage means buying shares worth more than your capital.

If you are a new investor, then you must know about some important precautions before investing in intraday trading. happens Therefore, in intraday trading, it is necessary to follow the market trend. If the trend of the stock market is negative, then selling always gives profit.

Choose stocks with liquidity for intraday


If you are trading intraday then always choose stocks with liquidity. Stocks with liquidity mean which have more movement. In intraday trading, it is more important to choose such stocks because of less time in intraday trading. By choosing stocks with liquidity, you can close your positions. Gets more opportunities to do

If one of your trades goes against you, then you get more exit opportunities in such a stock.

Now know about the necessary precautions in option trading investment. Option trading is considered to be the most risky trading. Before investing in options trading, you must have knowledge of the stock market. There are many factors at work in option trading.

Before doing option trading, you should know in detail about option greeks. Apart from this, there are many other things which need to be known as a precaution before investing.

 

Important precautions in making strike selection


Strike selection is most important in options trading. While doing options trading, you have to make strike selection according to the time. You need to know about in the money strike, out of the money strike and at the money strike. You can read my option trading in hindi article to know in detail about what is strike.

Out of the money strike gives you maximum profit when your target is likely to be achieved in a short period of time.

At the money option strike gives higher profits when your target is likely to hit the middle of the expiry. In this way, if you take some precautions before investing in the stock market, then you are less likely to lose.

WHAT DID YOU LEARN TODAY


I hope you have liked my article on  What precautions should one take before investing in the stock market? It has always been my endeavor to provide complete information about the future of stock market to the readers, so that they do not have to search any other sites or internet in the context of that article.

This will also save their time and they will also get all the information in one place. If you have any doubts about this article or you want that there should be some improvement in it, then you can write comments below for this. this is only for educational purpose.

 

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