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There is common belief that stock market is the place to become rich overnight. But that is a myth. No body can get rich at the stock market all on a sudden. It requires a long term strategy and patience to get profit at the stock market. As an investor you have to realize that there are many factors that control the price of the stocks and hence it requires careful study of these aspects to make profitable trades. But it is also true that it is impossible to make profit from each and every trade that you make at the stock market. When you are investing in the stocks it is evident that you will make loss at some trades. But the key for success at the stock market is to overcome those losses with profitable trades. Here we are discussing four golden rules of stock market investment that will help you reduce the loss and increase number of trades at the stock market that will get you profit.
                                                                                               
Have a long term investment strategy – When you are investing in the stock market, you can not have a short term goal or strategy for investment. As an investor you have to aim for long terms. Even if you are trading short term you need to analyze and understand the price movement of the stocks on a long term basis. This is important as each of the stocks has a definite price movement and follows a cyclic pattern that unfolds over a period of time. So if you really want to take advantage of the rise and fall of the stocks and benefit from it, you need to have a long term investment strategy that will definitely pay you in the long run. Having a strategic investment pattern will also help you to manage your portfolio well even when the stock market is going through a volatile phase.

Pick up the right stocks for investment – This is said to be the key for success at the stock market. Picking up the right stock means selection of the stocks for investment that are most likely to appreciate in the future at the stock market. Of course there are different types of stocks and each type show a different price movement. As an investor you have to decide which type of stock you are going to invest. If you are in the stock market with the objective of increasing your bottom line with a long term investment, the large cap and blue chip stocks should be your priority. These stocks rise in the market in a steady manner and they are always profitable investment if you are planning for an investment over a span of few years.

But if you are looking for stocks for short term investment or daily trading you need to do a little bit of research to find out the fundamentally strong stocks. Fundamental analysis of the stocks is the most effective way to find out the stocks that have a healthy financial standing and good potential to grow as a company.

Determine the right time for buying and selling stocks – Once you have selected the stocks for investment, you have to decide whether it is the right time for investing in that particular stock. Even if the stock is looking good and seems to have a good potential, it might incur you losses if you do not determine the optimum price level for investing in the stock. For this you have to technically analyze the price movement of the stock and determine the right price level when you should buy and sell the stock.

Diversify your portfolio – While investing in the stock market you have to remember that however potentially good a stock is, it may fall at the stock market for a reason that is directly or remotely associated with the company. So it is not wise to invest your entire portfolio to a single stock or in stocks of a particular sector. Ideally you should always distribute your investment in stocks from different sectors that are looking positive.

Remember these are the basic principles of stock market investment that you can not ignore. Follow these steps while investing in the stocks and you will make profit at the stock market for sure.

 

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