Contrary to popular belief, there is actually a right time to buy your most coveted stocks or to sell those shares that you’ve been hoarding for a while. And while the market remains largely unpredictable due to the volatility of everyday life, you should still be able to briefly ascertain the sentiment of the day if you have the know-how and the relevant information to do so. It is a right time to bet on a stock while market is still raising.
When To Buy Stocks
Timing is everything. This phrase succinctly encapsulates everything you need to know about stock market trading and is one of the key factors to make or break a successful investor or trader. Here are some general tips on when to buy for beginners.
Buy At Any Time When You Have The Funds
If a particular stock has piqued your interest and you’ve done your market research, you should employ dollar-cost-averaging (DCA) to reduce your overall cost as well as to reduce market risk. In other words, spread out your initial spending over time!
Buy At The Bottom
This may sound counterintuitive but cashing in on some losing stock from time to time will enable you to fund opportunistic reinvestments.
Buy In Gradually Rising Markets
A rapidly rising stock may plateau sooner than you think. On the flip side, slow-rising stocks may be the better option for you as you’ll have more time to pad your bags before selling.
Look At The Volume
There’s always a reason when massive amounts of stocks are being moved — whether it’s being bought or sold. You should try to jump on this bandwagon wherever possible by observing market trends.
Try To Avoid Any Volatility
In a volatile market, the risk of losses is that much higher compared to usual. In this case, practise discipline and remove your emotions from the equation to avoid some potentially crippling losses.
When To Sell Stocks
Likewise, there is a level of finesse required to make the most out of your assets when you do decide to sell. And as always, do not FOMO!
Fix A Target Price To Sell, Stick To It
When you get into the stock market, always leave emotions at the door. While you may lose some upside, in the long term, your performance will definitely be better than if you depended on panic selling.
Get Rid of Low Performing Stocks
If you’ve amassed a wide variety of stocks, your first task at hand is to sell the losing stocks to improve your long-term performance. This will help you to mitigate losses in the long term, while also freeing up money to reinvest in more promising stocks.
Watch For The Decline:
It could be something as simple as revenues or earnings falling or say, a global pandemic that’s affecting its fundamental business. But you should know when to jump ship when the time comes. Sell a stock when it moves below its average.
HODL: To reiterate, active trading invites massive risks in their own right. Your best bet for some gains is to buy winning stocks and hold until you’ve hit your exit strategy.
Follow Investment Winners
Sometimes, it’s great to follow the herd and sell when the time is right. In this case, following the footsteps of the top traders on social trading sites might be the better strategy for you.
Regularly Review Your Portfolio:
Review and readjust your portfolio at least once a year to suss out sectors and stocks that are not performing well. Learn from what went wrong and record your finding, then, you may sell and re-allocate the funds to other better-performing sectors.