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If you are not satisfied with the low yielding banking interest and want to earn some more, stock market can be a very good investment proposition for you. Though there is a misconception that stock market investment is like gambling it is not true at all. Yes stock market investment do has certain amount of risk but then it also has the possibility of good profit. Especially with booming Indian economy, post recession market scenario and growth of the Indian industries - all these factors have made Indian stock market a preferred investment avenue. In fact the investors from all around the globe is now interested in Indian stock market and investing in a big way that is also boosting the prospect of the Indian stocks.

So, there is no doubt about the fact that investing in the Indian stock market is a profitable proposition for any investor. But there is no denying to the fact that investing in stock market and trading in the stocks has its associated risk. As a trader you need to follow some simple steps that will eliminate the risk factor from your investment significantly and make sure that you make good profit at the stock market. Here we are providing some effective tips that will help you play safe at the stock market.

Decide on your trading pattern – In stock trading you have far too options including equity trading in cash segment, margin trading, delivery based trading, and derivative trading. Each of these types has different advantages and disadvantages and risk associated with them. Depending on your fund to invest in the stock market, your risk tolerance and above all your objective of investing in the stock market, you have to choose the best trading pattern.

Have long term trading plan – When you are investing in stock market you should always have a trading plan for long period of time. You should never approach the stock market with short term strategies. This will let you overcome the loss and with profit. Moreover when you are trading for loner term you care capable of taking more risk with your investment. Having a long term trading strategy also helps to trade during the down phase of the market.

Pick up the right stocks – Picking up the right stocks for investment is the key for successful trading at the stock market. As an investor you should always select the stocks that are most likely to appreciate in the future. Ideally you should invest in companies that are high on earning, has low debt and history of making profit consistently over the past years. Of course you can also pick the large cap and blue chip stocks that are the safest place to park your money.

Take timely trading decisions – Taking the right trading decision at the right time is necessary for avoiding loss at the stock market and making profit. You should always keep a close watch on the stocks that you are holding and on those stocks that are on your watch list. Make sure you invest at the right time so that you can make maximum profit.

Utilize the stop loss mechanism – The stop loss order is the best effective way to reduce your loss when the market is showing reverse trend. Make optimum use of this tool while you are buying or selling stocks. If you can diligently use the stop loss mechanism, you can surely avoid huge losses.

Diversify your stock market portfolio – When you are investing in the stock market it is not wise to put all your money or major portion of your fund in one particular stock or stocks from a specific sector. Diversifying your portfolio will minimize your risk as that will let you overcome your loss or make up for the disaster in one sector that might happen at any point of time.

All said and done but the first thing that you need to do is, having a basic idea of the stock trading. Without a comprehensive knowledge of the trading process and methods of analysis you can reach nowhere in stock market. Lastly, all the suggestions and guidelines are of no us if you do not keep watch on the day to day happening at the stock market. So the key of your stock market success is constant observation of the movement of the stocks and thorough knowledge of the stock market.

 

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