3 Tips to ensure safety of your capital in the stock market

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Are you willing to make stock market investment as your second earning option? If yes then, you must learn the art of investing in the market. This will help you achieve a perennial source of income. But before you make your investment, you must know certain facts that will help track the unpredictable. The movement of stock market depends on other businesses. If the business flourishes then you’ll find a steep rise in the market. However, the unpredictability which is associated with stock markets has kept the investors disillusioned. Hence, many trading experts who have hoped to earn hugely in this market have ended up loosing their entire assets. Thus, you must invest in good stocks so that in future if you fall in debts, you can sell off your stocks and use the profit to regain your financial stability. However, if you follow certain tips, then you can make proper investment in the market.

3 Tips to invest in the stock market

Read on to know the tips that can help you drag the most out of stock market.

  1. Invest in safe stocks:

Before you invest in the market, you must make out which shares are well established and are termed as blue chip shares and try to invest on that. People are often intended to buy the shares through IPO (Initial Public Offers). This is a great mistake which you should not do. It’s because, companies that are just getting listed can be more risky than the well established blue chip shares. The safest way to enter in this market is to invest in the shares of large companies on which part of the market index depends. After you gain some experience, you can diversify your portfolio. Ask your brokers to provide you with the research reports which will help you to understand how the different industries are operating.

  1. Avoid margin trading:

Since the market is extremely liquid and unpredictable, you must avoid short term investments. You must not use your margin to buy stocks and trade them in a short period of time. Try to avoid over leveraging yourself otherwise, if our call goes wrong, then you have to pay the total amount of the stocks you’re holding in the following day. For this you may have to liquidate other investments or even borrow at a higher rate of interest to compensate the loss. Thus, even if you get the facility, you must not use the margin to trade in such a volatile market.

  1. Be cautious:

Before you invest in the stock market, you must choose a suitable broker who has the best research capability. Even after you have chosen a suitable broker, you have to be extremely careful to make a note of certain things. After you have made any trade, you have to go through the contract note to check the trade number, order number, trade time, quantity price, brokerage and the signature of the authorized person. If you’re trading online, then you have to check your DP (Depository Participant) account regularly. This will help you know whether or not your shares have reached in your account on the following day after you have put your buy order or, cash in your account after you have sold your stocks. Apart from this, it will help you make out whether or not your brokers are moving your shares in the pool and transacting with them. If such things happen then you must call them to reverse it.

Lastly, you must get yourself organized while you’re trading. If you’re buying any new stocks in an IPO, then you must keep a copy of your application form and the checks. While you’ll be trading, try to keep your contract notes in the correct order and in a safe place. This way you can ensure safety of your money in the market which you may require in your hapless moments.

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