8 Ways to Improve Your Stock Investment Skills

To make sure we have enough funds to be prepared for the future. Simply earning and saving is not enough. Inflation – the price-rise beast – eats into the value of your money. Investing is the answer to inflation. Read more about the difference between savings and investing and how investing can help you beat the inflation monster.

  -  Understand why you want to invest in stocks. Are you seeking appreciation (capital gains) or income (dividends)?

  -  Timing your buys and sells does matter. Terms like “overbought” and “oversold” can give you an edge when you’re deciding whether to purchase or sell a stock. Technical analysis is a way to analyze securities through their market activity (past prices and volume) to find patterns that suggest where those investments may be headed in the short term.

  -  Do some research. Look at the company whose stock you’re considering to see whether it’s a profitable business worthy of your investment dollars.

  -  Understand and identify what’s up with “The Big Picture.” It is a small world after all, and you should be aware of how the world can affect your stock portfolio. Everyone from the bureaucrats in Europe to the politicians in the U.S. Capitol can affect a stock or industry like a match in a dry haystack.

  -  Use investing strategies like the pros do. In other words, how you go about investing can be just as important as what you invest in. Strategies such as trailing stops and limit orders are great tools, and fortunately, today’s technology gives you even more tools to help you grow or protect your money.

How does a stock market work?

The rise or fall in the stock prices is determined by a number of factors which includes demand and supply, political or social unrest, media, availability of suitable alternatives, the opinion of renowned and big investors like Rakesh Jhunjhunwala, natural disasters etc. These factors along with suitable information help create a bullish or bearish sentiment in the economy.

Accordingly say if the number of buyers is more than sellers, stock prices will certainly go up. Similarly, the stock price will tend to fall if numbers of sellers exceed the number of buyers.

If you ask me, what comes to my mind, here’s a small list-

1. Money

2. Trading screen

3. Warren Buffett

4. Profit and loss

5. Excitement and many more

Before going deep into this, let’s start with the very basics of stock market.