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The do’s and don’ts of stock market investment

Many entrepreneurs invest some of their business profits on the global stock markets. However, if you are new to investing in stocks it can all seem overwhelming. While that is a natural reaction that all new traders have, it should not stop you investing. Putting your money to work on the stock market can bring much better returns than if it is sitting in a business bank account.

Top things to do when investing in stocks 

If you are looking for some useful advice around stock market investment, the points below will help:

  • Do educate yourself – to give yourself the best chance of picking trades that should be profitable, and for managing your portfolio competently, you need to do plenty of research. Look for books written by successful investors and read the financial pages of newspapers and relevant online articles from established sources.
  • Do diversify – one great tip for any entrepreneur investing in stocks is to have a diverse portfolio. This could be a selection of stocks from companies in various sectors or a mix of assets. Doing so will ensure that any one stock, sector or asset doing badly will not wipe out your whole portfolio.
  • Do keep up with the news – another vital tip is to sign up for a subscription stock analysis service to stay updated with the latest market news and opinion. It is also very important to be aware of important events that are coming up and of any national or world news that could have an adverse impact on your investments, or conversely, might present investment opportunities.

What not to do 

When it comes to successful investments, it is also important to know what not to do! Here are some useful pieces of advice:

  • Don’t worry about the occasional losing trade – there is one thing that all traders will experience at some point – losing trades! Even the greats like Warren Buffett have had their share of them. When it happens to you, do not lose sleep over it, instead, review your investments and make what changes you feel are necessary.
  • Don’t risk too much on one trade – one common mistake to avoid is risking too much on any one stock purchase. If you have $1000 do not use all of it to buy one stock type. If it fails, then you are out of the game. Instead, only risk a proportion of your whole bankroll on any one trade.
  • Don’t try to time the market – one real no-no is trying to time the market. This is in effect trying to predict when the perfect time is to buy or the perfect time to sell. It is impossible to do so with any certainty so it best not to bother.

Know what to do and what to avoid in advance 

Although the financial markets may seem a daunting place to invest some of your company profits, it is not that difficult to obtain good returns if you research the subject thoroughly before risking any money.