Tips and Tricks On How To Profit From The Markets

If you are considering investing in the markets, or already do and are concerned you’re not getting the results you’d hoped for, then it’s time to do your research. You can’t have too much good advice when it comes to investing your money – the more informed your decisions are the more successful they are likely to be. 

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Mindset

It’s very important to understand the ‘rules of engagement’ and develop the right mindset when playing the markets, and appreciate how making money this way is different to ‘passive’ investments such as putting money into a savings account or maybe property.

With the markets, you’re proactively generating money and, as all good stockbrokers will warn you, all trading involves risk. The important thing is to accept this, and understand predicting the market is not always a precise science.

Be careful of emotion; accepting losses, accepting good and bad luck in equal measures and not ‘falling in love’ with a particular investment are basic attributes to help you trade successfully.

The long game

Investing in the markets isn’t necessarily the preserve of those with large sums to invest. That said, you should understand ‘slow and steady wins the race’ in that spectacular instant gains are probably the stuff of fiction. Consistent profit over a longer period is the more realistic aim to pursue.

Move on

As and when you make losses, be dispassionate and move on; above all don’t panic. Just because you picked a certain stock through some research, if it starts to underperform take a cold look. Move on if necessary – don’t let ego get in the way. There will always be another investment opportunity.

Is trading for you? Take a test drive

 If you’re new to trading, or are thinking of trying a different type such as spread betting, then it’s possible to try it out without using money in the form of paper trading.

It’s not the same as investing real money of course, but it’s worth considering and many stockbrokers provide demo accounts so you can ‘take it for a spin’. For more information, see leading stockbroker IG’s spread betting explanation.

Research routine

Researching and keeping a weather eye on the markets is obviously vital, but getting into a routine is important. When considering an investment or a certain market trend, having your ‘go to’ research sources and being able to take a methodical approach to this activity will help you amass the intelligence you need to make the best possible decision.

Beware the ‘old wives’ tales

If you haven’t already, you’re bound to come across various sayings regarding when and when not to invest. Careful analysis shows that some of these are inconsistent at best.

For example, the poetical “sell in May and go away; don’t come back ‘till St Leger Day” basically says “sell in May, buy in September” with the reasoning being that shares generally dip in value over the summer months due to the holiday season. In reality, the market is far too globalised for this saying to be a universal truth even if there was anything to it.

On the other hand, while not really an ‘old wives tale,’ the idea of buying poorly performing shares and selling three months later has proved a proven successful strategy as explained here.

Diversify

It’s important to spread your investments rather than ‘putting all your eggs in one basket’ even if a particular investment is performing well. You obviously don’t want your success or otherwise tied only to one or two companies.

The markets: a worthwhile investment vehicle

While your investments can go up or down, on the other hand equities can be a sound longer term investment than cash savings, especially with the very low rates of return. Develop a strategy, do your research and start thinking like an investor to give yourself the best possible chance of success.