SHARETIPSINFO >> Articles Directory >>Trading Strategies for an Uncertain Market called Indian stock market
Stock market goes through different phases at different times. Depending on various aspects the stock market goes through bull phase, bear phase and the correction phase. During the bull phase the stock prices of most of the shares go up and there is a general feeling of optimism among the investors. Most of the people invest in the market during this time and because of the high demand of the stocks the price of the stock go further up. While investing in the bull market investors need not think beyond a limit. But it is the bearish or down trend of the market when the market remains volatile or uncertain most of the time, it becomes tough for the investors to take any decisions for investing in the market.
But technically speaking you can make good profit by even investing in the volatile market. All you need to do is find the stocks that are worth investing and most importantly find the level at which you should buy the stock. The key for making profit at the volatile or uncertain market is detailed research and analysis of the stock and the overall market. Here we are providing some practical tips on investing in the volatile market.
Find out the right stocks – While investing in the uncertain market you have to find the stocks that are evenly priced. That means you have to find out stocks that are not overpriced in the present market as the overpriced stocks generally see corrections and the price of these stocks go down very rapidly in the volatile market. So carry out a detailed study of the stock and the PE ratio to find out if the stock is exactly priced before investing in that particular market.
Technical Analysis – Once you have selected the stocks in which you want to invest, you need to do the technical analysis of the stock and study the pattern of the price movement of that particular stock. It will give you a clear idea of what is the perfect price level at which you should invest at the stock. If you find out that the stock has well passed the optimum level for buying the stock and it will hardly make any progress in the near future you should not even bother to invest in that stock.
One of the safest ways to invest in an uncertain market is to invest in the large cap stocks. In most cases the price of these large cap stocks come down when the market is uncertain as there is comparatively less demand for the stocks as the buyer’s confidence is low. In fact you get the large cap and blue chip stocks at a price that was otherwise impossible during the bull phase of the market. So it is during this uncertain phase of the market that you can get the blue chip and large cap stocks at low price and it is a great opportunity for the investors to invest in these stocks. This is because when the market returns to a bull phase the price of these stocks are surely to rise. So if you can select a few good stocks that are fundamentally strong from the large cap segment and invest in them during the low phase of the market you will definitely make a good profit over the time.
Always remember that when the stock market is in a bull phase and the buyer’s confidence is at high, nearly every stock rise in the market. But it is tough to trade in an uncertain market when the price of the stock is falling and buyers’ are avoiding investments in fear. The key for success during this time is patience, alertness and good research.
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