Trading tips from a Pro

Want to earn money by getting into and investing in the share market? Want to be the next Warren Buffet of the stock market? We bring for you the trading tips from the god of smart investments, Warren Buffet:

Sow today, reap tomorrow

Whatever investments you make today might not bear fruit in a very short span of time. Investments take years to ripen up and give healthy returns. You need to stay patient and not get intimidated by fluctuations in the market. The lesson here is that one should be a forward thinker when it comes to investments, savings or even expenses. The habit of investments can make you richer or can even save you from some financial emergency, this money set aside can save you much pain.

Think of long-term

Warren Buffet suggests about buying something that you would be perfectly happy to hold if the market got shut down for ten years. It does not surely mean that you purchase one stock and then forget about it completely but, what he is trying to convey is that before investment one should do proper research about the company and invest in stable, established business that has a long-lasting competitive advantage.

Knowledge is the key

Buffet says one of the best investment individuals can make in himself, by equipping with the power of knowledge. He spends hours daily to read something new and is doing so for most of his life. The more information you have regarding a topic, the wiser decisions you can make, be it trading or any decision you come across in life. Risk comes from not knowing the things, and by gaining knowledge, you reduce your risks. Here at 5paisa.com, one has a vast source of market insights from experts and this can make you the next Warren Buffet.

Look for top-brands that control prices

Always have some large-cap companies in your portfolio because they are more reliable than any other mid-cap or small-cap company. They might not surprise you with sudden rise or fall, but they surely have a stable growth. To bring greater stability and reduced risk factor one can go for stocks on SENSEX or NIFTY50 in Indian markets.

Minimize the mistakes and learn from previous ones

It is a human tendency to make mistakes, but a smart investor is someone who learns from them and doesn’t repeat them. Also, it is said that one lifetime is not enough to make all the mistakes and learn from them so one should read about other’s mistake and how they corrected them. So learning from other's mistake is also as much important.

Never Overpay

You might find some company’s stocks very lucrative and are even ready to pay a premium for it, but Buffet says a strict no to it. He says wait for the moment when markets crack and the price of the company you desire goes down, this is the best time to grab them. One can create a watch-list of such stocks and wait for the stocks to fall, by doing so the potential of future capital gains gets increased.